19 Nov 2013 : Column 847

19 Nov 2013 : Column 847

House of Lords

Tuesday, 19 November 2013.

2.30 pm

Prayers—read by the Lord Bishop of Birmingham.

Energy: Shale Gas


2.36 pm

Asked by Lord Renton of Mount Harry

To ask Her Majesty’s Government whether they expect shale gas to be widely used in the United Kingdom; and whether there are circumstances under which they consider fracking for gas is likely to be dangerous.

The Parliamentary Under-Secretary of State, Department of Energy and Climate Change (Baroness Verma) (Con): My Lords, wherever shale gas operations are conducted they must be done in a safe and environmentally sound way. There are regulations in place to ensure on-site safety, prevent water contamination and mitigate against seismic activity and air pollution. As part of this rigorous process, my department, the Environment Agency and the Health and Safety Executive must all approve an application. Local communities will be consulted before any operations and the industry has committed to provide a package of benefits from shale gas production.

Lord Renton of Mount Harry (Con): My Lords, I thank my noble friend very much for that opening, but I want very quickly to say a few words about the position of shale gas in the UK. On one side, shale gas is considered as having no real future importance and as not being worthwhile; but on the other side, the position is quite different. The Financial Secretary to the Treasury recently wrote that shale gas has the potential to support thousands of jobs, generate substantial tax revenue and keep energy bills low for millions of people. If that is true then our shale gas is very important. Which way would the Minister vote on this?

Baroness Verma: My Lords, my noble friend is aware, of course, that the Treasury and the Government are very keen to explore all sources of energy. Shale gas will provide the UK with greater energy security, economic growth and jobs, and the Government are encouraging exploration to determine this potential.

Lord Barnett (Lab):My Lords, I suppose that we have all been nimbys at one time or another but it is important now that the public interest should be the main issue. Unfortunately, it looks as if the companies that are investing in fracking are being stopped or delayed, and that is clearly not in the public interest. As I am sure the Minister knows, all the evidence shows that there is only a low public health risk, and

19 Nov 2013 : Column 848

even that could be reduced considerably by proper regulation. In those circumstances we need the full support of both sides of the House. I hope that my own party will strongly support the Government on this, although there may be some critical points. What can the Minister tell us about what they are doing strongly to support the companies that are bringing in the private investment which is desperately needed in this vital matter?

Baroness Verma: My Lords, the noble Lord is absolutely right that this is an important source for us, and as with all things, we are making sure that the environmental protections are in place. We have a very strong regulatory process in this country, as he said. We are doing whatever we can to ensure that the process is followed through smoothly and as quickly as possible so that this industry which is investing in our country is not hindered by unnecessary regulations and red tape.

Lord Hylton (CB): My Lords, do the Government consider that there are risks from shale gas exploration for such national assets as, for example, the hot mineral water at Bath and the water flowing through the caves at Cheddar? Are there methods for assessing such risks, and are there ways of preventing harm?

Baroness Verma: My Lords, I hope that I am making it clear that we take seriously any environmental risk whether it is water contamination or anything else. It is therefore right that the Environment Agency, the Health and Safety Executive and my department work very closely together to ensure that the proper processes are followed through and that all the regulations which need to be in place are in place in order for companies to do their work carefully, safely and properly, and for the country to benefit from the potential.

Lord Borwick (Con): My Lords, is my noble friend aware that just 25 acres of shale gas well pads in Pennsylvania produce as much energy each year as the entire British wind industry, and that they produce energy rather more reliably, too?

Baroness Verma: My Lords, I am extremely grateful for my noble friend’s intervention because it allows me to agree with him that shale gas is a very important component of the mix that we want for our country.

Viscount Brookeborough (CB): My Lords, does the Minister agree that there is a big difference between this country and America in that people there own the mineral rights under their farms whereas in this country it is very important to get public opinion behind it? The businesses involved may provide community benefit but that will not replace such a thing as financial benefit. I am not sure that they will get the public behind shale gas without that.

Baroness Verma: My Lords, the noble Viscount raises an interesting point. Companies have pledged through their own charter that they will at exploration

19 Nov 2013 : Column 849

stage give £100,000 in community benefits, but also that 1% of the revenues generated from each well will go to local communities.

Lord Teverson (LD): My Lords, in the United States the shale gas industry is fragmented and there are good and not-so-good operators in terms of environmental risks. What specific lessons have been learnt from the United States? It is estimated that some 10% of the total UK water supply could be demanded by shale gas if, as many of us hope, it were to be successful. What discussions are the Government having with the water industry to make sure that that area will be catered for if shale gas development takes place?

Baroness Verma: My noble friend again raises an important point. Water UK, which represents water companies, is working closely with the United Kingdom Onshore Operators Group—the representative body for onshore oil and gas—to make sure that any potential extra demand for water will be managed sensibly. However, water companies are already obligated to produce and update every five years a proper water plan. Water companies will therefore assess well in advance the amount of water that will be available to the operator before it is used.

Baroness Worthington (Lab): My Lords, I wanted to let the Minister know that I have just returned from Poland, and fracking was a topic of great conversation there. What if anything has she done to reach out to Poland to discuss how it will pursue fracking? It could make a huge difference to Europe’s carbon emissions.

Baroness Verma: My Lords, I know that the noble Baroness was in Poland and was aware that she returned today. As she will be aware, the UK is always in close conversation with all its member-state partners, and of course these conversations are ongoing.

House of Lords: Size


2.44 pm

Tabled by Lord Foulkes of Cumnock

To ask Her Majesty’s Government what representations they have received about the increase in the size of the House of Lords.

Lord Dubs (Lab): My Lords, on behalf of my noble friend Lord Foulkes, and with his consent, I beg leave to ask the Question standing in his name on the Order Paper.

The Chancellor of the Duchy of Lancaster (Lord Hill of Oareford) (Con): My Lords, the Government have received few representations about the size of the House. Of the ones that I have received, I would say that the majority are from those seeking to increase the size of the House by suggesting eminent candidates for membership, sometimes including themselves.

19 Nov 2013 : Column 850

Lord Dubs: That is very good. My Lords, I do not need to remind the Leader of the House that, with the exception of the National People’s Congress of China, we are now the largest legislative Chamber in the world. Does he agree that there is virtually no support on the Benches behind him—or anywhere else in the House—for further increases in the size of this House? Is he not aware that people see this attempt to pack the House as a bit on the cynical side? However, it is not working, because the Government are still losing Divisions. What is the point?

Lord Hill of Oareford: There are a number of points. First, we need to keep refreshing the House with new and young membership. I cannot remember which noble Lord it was who the other day pointed out that sadly all of us are growing older. That is why we need to have new Members coming in.

On the point about “packing the House”—that was the phrase the noble Lord used—I repudiate the charge. In his next point, he himself gave the lie to that by citing the fact that, for some extraordinary reason, the Government continue to suffer the occasional defeat on their legislation. In terms of the numbers, it is worth reminding the House that if one draws a comparison with the numbers for each of the four main groups in 2007 when Gordon Brown became Prime Minister, there are 25 more noble Lords now than there were then. We sometimes forget that, sadly, around 100 Members have died or taken leave of absence since the most recent general election.

Lord Steel of Aikwood (LD): Is my noble friend aware that in the other House, Mr Dan Byles has taken up the Bill that we passed some months ago, which would provide the authority for the House to produce both retirement and expulsion? Would he keep a benevolent eye on the progress of that Bill in the other place, because it would provide an alternative exit strategy to that provided by the Grim Reaper?

Lord Hill of Oareford: I am keen that we should have alternatives to the Grim Reaper. I shall certainly keep an eye on progress. The whole House will share my gratitude to my noble friend Lord Steel for his persistence in taking forward these issues. Therefore I am pleased, as I know he will be, that, following representations from a number of people, not least himself, the Government’s position has moved to one of support for the Private Member’s Bill sponsored by Dan Byles. The whole House will welcome that. It will deliver the benefits to which my noble friend referred.

Lord Hunt of Kings Heath (Lab): My Lords, has the noble Lord read the study by UCL that shows that if the Government go ahead with their intention to rebalance the Lords according to the votes cast at the most recent general election, the size of this House would reach 1,200 or more? That would be a nonsense. Will the noble Lord reassure the House that no more political appointments will be made to your Lordships’ House until the next general election?

19 Nov 2013 : Column 851

Lord Hill of Oareford: I will say two things. First, shortly after I came in, I was assured by everyone that there were going to be 100 Peers packed into the House within a couple of weeks. The noble Lord, Lord Hunt, will remember that, on the back of an amendment put down by my noble friend Lord Steel, he put forward a helpful amendment urging the need for restraint so far as appointments and patronage were concerned. I argue—as I argued then—that that restraint has been shown. The August list of 30 or 31 names was the first political list for three years.

In terms of the future, I cannot give any different undertaking from that which I am sure all my predecessors would have given: namely, that patronage rests in the hands of the Prime Minister. However I shall certainly ensure, as I continually do, that the views of your Lordships’ House are brought before all those who are concerned with these decisions.

Finally, following which I must allow others to speak—I know that this is an issue about which many people in this House care a lot and that there are concerns—it is very important when talking of the work of the House to the outside world that we do not in some way give the impression that this House is unable to do its job. We do it outstandingly well.

Lord Laming (CB): My Lords, will the Leader of the House take the opportunity to emphasise the last point that he made, not only in this House but elsewhere? Whatever the issues may be, it is important to recognise that this House holds the Government to account to a very high standard, scrutinises legislation to a great degree and promotes debates that are of great concern to our fellow citizens. The House actually functions well.

Lord Hill of Oareford: I agree with the Convenor of the Cross Benches very strongly. In taking legislation through your Lordships’ House, I saw the difference in the intensity of scrutiny in this House compared with that at the other end of the building. I think that we are right to be proud in the way that the noble Lord reminds us.

Baroness Seccombe (Con): My Lords, on a lighter note after that very important question, one hears the complaint that there are too many noble Lords and that we cannot get a seat. I draw the House’s attention to the fact that, in the Commons, there are 650 Members and 350 seats. With an average number of 450 Peers, or around that figure, attending daily, it seems that we are rather well served in the ratio of seat to Peer. Does my noble friend agree?

Lord Hill of Oareford: I think my noble friend said “seat to Peer” rather than “seat to rear”. It is good of her to remind noble Lords of that, and I know she is not suggesting that we should therefore set about a process of reduction of space. I know that here are problems at certain times of the day—Oral Questions is a good example. However, we all know that there are other times of the day when the Chamber is not as full as perhaps we might sometimes wish. As the noble Lord, Lord Laming, said, in terms of the job that we

19 Nov 2013 : Column 852

do, we do not have guillotines, we are all able to put amendments down and we take part in scrutiny. I have been able to increase the number of opportunities for QSDs, which I think has been widely welcomed, and we are getting through them much faster. We have had more post-legislative scrutiny and more ad hoc committees. I am hoping, in that way, to address the issue of attendance, which is a greater challenge for us than the question of the absolute size of the House.



2.52 pm

Asked by Baroness Boothroyd

To ask Her Majesty’s Government what representations they have received relating to the creation of a humanitarian aid corridor in Syria.

Baroness Northover (LD):My Lords, humanitarian corridors are temporarily demilitarised zones intended to allow the safe passage of humanitarian aid and the evacuation of vulnerable civilians. DfID supports many humanitarian agencies operating inside Syria. To date, DfID has received no requests or representations for a humanitarian corridor from these partners or other humanitarian agencies. We welcome any option that complies with international law that might save lives in Syria.

Baroness Boothroyd (CB): I have it on the authority of Dr David Nott, the distinguished London surgeon who recently returned from delivering front-line medicine in rebel-held Syria, that aid is not getting where it is most needed. Dr Nott made representations to HMG, to which he has not received even an acknowledgement as yet. Will the Government work with the international community to insist that a humanitarian corridor be opened to deliver life-saving medical aid and bring the severely wounded to safety? Safe passages have been achieved in other conflict zones. If chemical weapons inspectors can be given protection, surely protection is possible for humanitarian aid.

Baroness Northover: I have a great deal of sympathy for what the noble Baroness has said and for what the surgeon David Nott has said. I heard the appeal that he made and obviously pressed very hard within DfID to elucidate this, because it is obviously extremely appealing. The problem is of course, as the noble Baroness will know, that the situation in Syria is immensely complex. One needs only to look at the map of where various groups are, and how that changes from day to day, to see how complex this is and the number of humanitarian corridors that would be required. In order for those to be created, all groups in the relevant area would need to buy in. Alternatively, it would need to be enforced in a military fashion, which would require a UN Security Council resolution. I think the noble Baroness can see some of the challenges in my answer.

19 Nov 2013 : Column 853

Lord Chidgey (LD): My Lords, some 18 months ago, Turkey was considering intervening in Syria to create a humanitarian buffer. At the same time, US State Department officials were mooting a similar no-kill zone. The massacre at Srebrenica tells us, with a very good example, why a humanitarian corridor would require a protective military presence. Who would provide it in Syria, and with whose collective agreement?

Baroness Northover: My noble friend is absolutely right, and that bears out the answer I just gave to the noble Baroness. We would require the buy-in of all the parties or that kind of military enforcement. That is why the major organisations working in the area—for example, the United Nations, MSF and the ICRC—have reservations about the proposal for a humanitarian corridor for the very reason that my noble friend referred to. Sometimes, these result in civilians being less safe. He pointed to the Bosnian example, but more recently, of course, there has been the Sri Lankan example. There are examples where not only civilians, who are supposed to be protected, are in greater danger, but the humanitarian workers who may appear to be shielded by particular military groups are also under greater threat.

Baroness Kinnock of Holyhead (Lab): My Lords, will the Minister clarify whether discussions are taking place in response to the view expressed by the UN High Commissioner for Human Rights, Navi Pillay, that Syria should be referred to the ICC? Would an ICC referral not send an unequivocal message that such is the seriousness of the crimes—including denying the right to humanitarian aid—that strong measures to tackle impunity are essential and that criminal indictments of senior leaders, as was the case in the Balkans, can strengthen peace efforts?

Baroness Northover: It is clear that referring leaders in these situations to the ICC has, we hope, a chilling effect for other leaders thereafter. One can see that building in terms of leaders’ responses, and one has to hope that in the situation in Syria some of the rebel groups as well as the government groups will recognise the challenge there. However, at the moment, the most important thing is to try to bring about a political resolution to this problem so that the killing on all sides can stop.

The Lord Bishop of London: My Lords, I think that everybody recognises the complexity of the situation, but just over a month ago, the UN Security Council itself called unanimously for humanitarian pauses. What contribution have Her Majesty’s Government been able to make diplomatically pursuing the possibility of more humanitarian pauses to bring relief to some of the civilians caught up in the fight?

Baroness Northover: Again, that is a case in point. The right reverend Prelate makes a good point in referring to those humanitarian pauses which were politically agreed but not delivered. That is the challenge. This is a very complex situation with many groups

19 Nov 2013 : Column 854

fighting each other, and enormous efforts are being put in—not least by UN special envoy Brahimi at the moment—to try to push forward some kind of agreement, but it is immensely difficult.

The Earl of Listowel (CB): My Lords, does the Minister agree that as welcome as the statement recently produced on humanitarian access was, the perception on the ground is that access to Syria is not being permitted as it needs to be? Will the Minister seek to encourage her colleagues that, no matter how frustrating it may be to deal with the authorities in Syria, in order to move further forward with greater humanitarian access, one needs to persevere in communicating with the senior Syrian leadership?

Baroness Northover: The noble Earl is right. The presidential statement called for unhindered humanitarian access, including the granting of visas and permits, which is something that the Syrian Government can do, and pressure is being put on them to do that.

Lord Cormack (Con): My Lords, in response to the noble Earl’s question, is it not made rather difficult because we do not recognise the legitimacy, or even the existence, of the Syrian Government?

Baroness Northover: The situation is extremely complex.

Small and Medium-sized Enterprises


2.59 pm

Asked by Lord Mitchell

To ask Her Majesty’s Government what assessment they have made of the level of financing available to small and medium-sized enterprises.

Lord Popat (Con): My Lords, under this Government credit conditions continue to improve. Survey evidence indicates that more small and medium-sized enterprises are using external finance. Recent data from the Bank of England show that gross lending is continuing to rise year on year and in September reached the highest level since 2009. More broadly, confidence is beginning to return to businesses, which are now more ready to borrow and invest than since before the financial crisis.

Lord Mitchell (Lab): My Lords, yet again I am asking the Government why much needed financial support is not getting through to SMEs. According to the Bank of England, net lending to SMEs was down £600 million in the second quarter of 2013. The answer to the Question is obvious: financing that should be going to small businesses is in fact being used by banks to build up their profitable mortgage portfolios. Does the Minister accept that banks should be backing small businesses rather than helping to create another property bubble?

19 Nov 2013 : Column 855

Lord Popat: My Lords, it is important to set the picture in context. According to the British Bankers’ Association, the current stock of lending to SMEs by the top seven banks is more than £99 billion. By this measure, around £2 billion is lent by the banks to SMEs every month. SMEs are actually twice as likely to be successful when applying for finance than has been predicted.

The World Bank’s ease of doing business index puts the UK as the top place in the world for accessing finance. I think this overstates how things are. In any case, we know that there is scope for improvement. Clearly, it is a tough environment for small businesses. Although net lending might have dropped last year, I am pleased to report to the noble Lord that gross lending has gone up, as did net lending in September.

Baroness Brinton (LD): My Lords, the August SME Finance Monitor showed a welcome increase in SMEs seeking finance, from 39% to 44%, but this increase is from less conventional sources of funding; for example, lease and income financing, which focus on cash flow rather than growth. The report went on to say that 25% of SMEs expect their loans to be turned down, whereas in fact 50% are successful. What can the Government do to encourage more SMEs to apply for finance for growth?

Lord Popat: The noble Baroness makes a very important point. SMEs are more likely now to have an alternative source of finance, including asset or leasing and quite often inward discounting. They are not approaching their own banks as much as they used to, but I am pleased to report that banks are now proactively lending money to SMEs.

Lord Haskel (Lab): Will the Minister respond to my noble friend’s question about real estate? The Bank of England report states:

“The outlook for corporate lending also depends on developments in the commercial real estate (CRE) sector, which makes up around a third of lending to non-financial businesses”.

The point is that the property bubble is taking money away from the SME sector. Will the Minister respond to that?

Lord Popat: My Lords, under our Funding for Lending scheme, £80 billion has been allocated by the Bank of England, of which some £17.6 billion has been taken up by SMEs. I agree that a large proportion of that is in the property sector. We have relaxed some of the conditions for lending money to SMEs, which are now able to finance their debt or their stock. Hence we will be lending more money to SMEs and this figure is gradually going up. Real lending to businesses is now taking place.

Baroness Neville-Rolfe (Con): My Lords, finance is important for small and medium-sized enterprises right across the board. Can the Minister tell us what the Government are doing to help with cutting red tape? This is one of the most important things for a small business. Finance is important but cutting red tape, which gets in the way of start-ups and small businesses, is also very important for small businesses’ future.

19 Nov 2013 : Column 856

Lord Popat: My Lords, it is a pleasure to answer the first question from my noble friend, who brings a wealth of experience from both the private and public sectors. As your Lordships know, the Government have introduced a moratorium on all new domestic regulations for three years for new start-ups and businesses with fewer than 10 employees. In addition, in January we introduced a “one in, two out” rule on all domestic regulations affecting businesses and voluntary organisations. The Government are absolutely committed to creating a culture in which all businesses, including SMEs, can thrive.

Lord Stevenson of Balmacara (Lab): My Lords, in September 2012, having failed to persuade the Treasury to break up RBS, the Secretary of State announced the formation of the British Business Bank. However, it was not until 17 October 2013 that the first chair was appointed and then we were told that the bank was in a “substantial expansion phase” and that it was on target to unlock £10 billion for expanding companies. Last week we learnt that the bank finally made its first investments, when it gave £45 million to two financial institutions, Praesidian Capital Europe and BMS Finance. When will we see funding actually flowing to the small and medium-sized businesses that need it and when do the Government expect the bank to reach its £10 billion target?

Lord Popat: My Lords, on 1 November RBS committed to a new direction that will lead it to being a boost to the UK economy, rather than a burden. It will be dealing decisively with the problems from the past by separating out the good and the bad and putting the bad loans in an internal bad bank. RBS will now focus on its core British business, supporting British families and companies. It will sell off more of its overseas operations and go on shrinking its investment bank so it has more capital to support lending to the British economy. RBS is committed to becoming the number one bank for small and medium-sized enterprises, as judged by customers, measured by the newly created survey to be run by the Federation of Small Businesses. On growing SME lending, RBS continues to be the number one bank for SMEs.

Lord Teverson (LD): My Lords, one of the key problems at the moment in the British economy is not about lending but quite the opposite—businesses are sitting on cash mountains, particularly large corporations and even medium-sized and some small businesses. We need now to liberate that cash so it is invested and drives this economy forward. Is not the good news economically at the moment the exact trigger for those businesses to do just that?

Lord Popat: I agree with my noble friend. In fact, we are returning to consumer and business confidence. The figures this morning from the OECD show that our growth forecast has gone up from 0.6% to 1.4% for 2013 and 2.4% for 2014. My noble friend is quite correct that a large number of SMEs are holding cash in their banks. A lot of them are also risk averse, or were until recently, and hence are not borrowing that much money from the banks.

19 Nov 2013 : Column 857

Northern Ireland (Miscellaneous Provisions) Bill

First Reading

3.07 pm

The Bill was brought from the Commons, read a first time and ordered to be printed.

Statutory Instruments

Membership Motion

3.07 pm

Moved by The Chairman of Committees

That Baroness Humphreys be appointed a member of the Joint Committee in place of Lord Avebury, resigned.

The Chairman of Committees (Lord Sewel): My Lords, in the spirit of restoration and renewal, I beg to move the Motion standing in my name on the Order Paper.

Motion agreed.

Motor Vehicles (International Circulation) (Amendment) Order 2013

Motion to Approve

3.08 pm

Moved by Baroness Kramer

That the draft order laid before the House on 17 October be approved.

Relevant document: 12th Report from the Joint Committee on Statutory Instruments, considered in Grand Committee on 12 November.

Motion agreed.

National Health Service (Approval of Licensing Criteria) Order 2013

Motion to Approve

3.08 pm

Moved by Earl Howe

That the draft order laid before the House on 16 October be approved.

Relevant documents: 11th Report from the Joint Committee on Statutory Instruments, considered in Grand Committee on 12 November.

Motion agreed.

19 Nov 2013 : Column 858

Inheritance and Trustees’ Powers [HL]

Order of Consideration Motion

3.08 pm

Moved by Earl Attlee

That it be an instruction to the Special Public Bill Committee to which the Inheritance and Trustees’ Powers Bill [HL] has been committed that it considers the Bill in the following order:

Clauses 1 and 2, Schedule 1, Clauses 3 to 6, Schedule 2, Clause 7, Schedule 3, Clauses 8 to 11, Schedule 4, Clause 12.

Motion agreed.

NHS: Mid Staffordshire NHS Foundation Trust


3.09 pm

The Parliamentary Under-Secretary of State, Department of Health (Earl Howe) (Con): My Lords, I shall now repeat a Statement made earlier today in another place by my right honourable friend the Secretary of State for Health on the Government’s response to Robert Francis’s report on Mid Staffordshire Hospital. The Statement is as follows.

“With permission, Mr Speaker, I would like to make a Statement about the Government’s response to the Mid Staffordshire NHS Foundation Trust public inquiry.

Let me start by paying tribute to the men and women of courage without whom this darkest episode in the history of the NHS would never have come to light: people like Julie Bailey and members of Cure the NHS, who stood outside the Department of Health in all weathers because no one would meet them to hear about the inhumane care given to their loved ones; brave whistleblowers like Mid Staffs nurse Helene Donnelly; and campaigners who suffered tragedies elsewhere, like James Titcombe, who never gave up the fight after losing his son, Joshua, at Morecambe Bay. They suffered greatly for their selfless determination to make sure that their personal losses were not in vain. All of us in this House today are humbled to stand in the shadow of their bravery.

Robert Francis and his team also deserve huge credit. Their diligence and thoughtfulness led to an outstanding report which will transform our NHS for the better. Finally, let me pay tribute to all NHS front-line staff, for whom reading about these events in the media has been immensely distressing. We owe it to them to make sure that poor care is never again allowed to take root and survive unchallenged in our NHS.

Since our initial response to the inquiry in March, much has happened. Thirteen hospitals have been put into special measures as part of a tough new failure regime. Those hospitals, where poor care had been allowed to persist, are now being turned around, and I thank the Keogh inquiry team for its painstaking work in this area.

19 Nov 2013 : Column 859

Independent, Ofsted-style ratings of hospitals are under way, led by Professor Sir Mike Richards, the new Chief Inspector of Hospitals. The first 18 trusts are currently being inspected, with quality of care and safety paramount. We have appointed new Chief Inspectors of Adult Social Care and General Practice, whose robust inspections of care homes, domiciliary care and surgeries start next year. Surgical survival rates for 10 major specialties have been published by individual surgeons, making the NHS a world leader in transparency.

Today, the Government are publishing their further response to the inquiry as well as our response to the Health Select Committee’s report on the inquiry. Both these responses have been laid before Parliament.

The NHS is a moral being or it is nothing. It was set up 65 years ago with the noble ideal that no one should ever be prevented by background or finances from accessing the best care. That is why it remains the most loved British institution, and rightly so. But each and every case of poor care betrays those worthy aims. I do not want simply to prevent another Mid Staffs; I want our NHS to be a beacon across the world not just for its equity but its excellence. I want it to offer the safest, most compassionate and most effective care available anywhere, and I believe it can.

But that is only if there is a profound transformation of the culture in the NHS. The inquiry shows the devastating effects of overly defensive responses: hurting families, suppressing the truth and preventing lessons being learnt. Failure cannot be addressed when it is covered up, so today I am announcing new measures to promote a culture of openness and transparency.

From 2014, every organisation registered with the CQC will have a statutory duty of candour. Patients must be told promptly about any avoidable harm, but there will be a statutory requirement to notify any harm that has led to avoidable death or serious injury.

We will consult on whether hospitals that are found not to have been open and transparent with patients or families at the earliest reasonable opportunity should risk having their indemnity from litigation awards reduced or removed by the NHS Litigation Authority. The signal must go out loud and clear to all clinicians: if in doubt, report an incident and tell the patient.

The professional regulators have agreed to place a new, strengthened professional duty of candour on all doctors and nurses. Failing to inform a patient, not reporting avoidable harm, or obstructing someone else seeking to do so will be subject to sanctions, including being struck off.

Inspired by the airline industry, this duty will cover “near misses”—occasions when mistakes were made that could have led to harm and from which we need to learn. Conversely, prompt reporting may be considered as a mitigating factor in a professional conduct hearing. This is not about penalising staff for making mistakes; it is about enabling them to learn from them. The NHS will adopt a culture of learning, as recommended by Don Berwick and his expert committee. I thank them for their seminal report.

A culture of openness also means learning from complaints. In line with the recommendations of the right honourable Member for Cynon Valley and Professor

19 Nov 2013 : Column 860

Tricia Hart’s excellent review, all patients will be able to access independent help in making their complaint, with clear signs in every ward explaining how to do so; the Chief Inspector of Hospitals will inspect complaints handling to establish whether trusts are genuinely seeking to understand and learn from them; every quarter, trusts will publish the number of complaints received and the lessons learnt; and the Health Service Ombudsman will dramatically increase the number of cases that she looks at.

It is impossible to deliver safe care without safe staffing levels. All hospitals will be required to monitor their staffing levels on a ward-by-ward basis, analysing precisely how many shifts meet safe staffing guidelines. By the end of next year, this will be done using models independently approved by NICE. No hospital will be able to conceal unsafe staffing from the public because from next June all these data, both at ward and hospital level, will be published alongside other safety data on a new NHS safety website, triggering CQC action if there is cause for concern.

Things are already changing for the better and I am pleased to report that trusts are planning to recruit an additional 3,700 nurses compared to a year ago. However, we need to go further to train and motivate staff, particularly healthcare assistants and social care support workers who perform so much vital care. Healthcare assistants and social care support workers will be required to have a new care certificate to ensure that no one is ever asked to perform personal care without adequate training, whether in hospitals or care homes. The title “nursing assistant” will be used widely in hospitals and paths to nursing careers will be improved. I thank Camilla Cavendish for her excellent work in this area. We also need to broaden the talent pool going into NHS management positions, in particular attracting more clinicians and those with good external experience. We have introduced a fast-track leadership programme, sending 50 people a year to a world-leading business school, followed by time shadowing top NHS chief executives.

Robert Francis correctly highlighted the failure of regulatory systems to identify quickly what happened at Mid Staffs. Subsequently it has become clear that Ministers put pressure on regulators which may have led them to tone down news about poor care. This is totally unacceptable, so we will strengthen the statutory independence surrounding reports into care quality. The chief inspector will be the nation’s whistleblower-in-chief and nothing must ever be allowed to stand in his way. The CQC can prosecute when fundamental standards are breached. Trusts put into special measures will have a strictly limited time to get their house in order before administration is considered. Foundation trusts in special measures will have their autonomy suspended and action will be taken to ensure that they quickly improve. No trust will be able to progress to foundation status unless they are rated good or outstanding.

Proper accountability must be at the heart of the NHS. I have therefore accepted Professor Don Berwick’s recommendation of legal sanctions for those found guilty of wilful neglect or ill treatment. There will be a new criminal offence for care providers that supply or publish false or misleading information. A new “fit

19 Nov 2013 : Column 861

and proper persons” test will enable the CQC to bar unfit directors from boards. Every hospital patient should have the names of a responsible consultant and nurse above their bed. Starting with over-75s from next April, there will be a named accountable clinician for out-of-hospital care for all vulnerable older people.

One of the most chilling accounts in the Francis report came from Mid Staffs employees who considered such care to be “normal”. Cruelty became normal in our NHS and no one noticed. The Francis report made 290 recommendations. I accept the principles behind all of them and, wherever possible, have adopted the practical solutions suggested by the inquiry.

Robert Francis himself has welcomed today’s announcement as a carefully considered and thorough response to his recommendations, which he says will contribute greatly towards a new culture of caring and making our hospitals safer places for their patients.

Today’s measures are a blueprint for restoring trust in the NHS, reinforcing professional pride in NHS front-line staff and, above all, giving confidence to patients that after Mid Staffs the NHS has listened and learnt and will not rest until it is delivering the safest, most effective and most compassionate care anywhere in the world. I commend this Statement to the House”.

My Lords, that concludes the Statement.

3.20 pm

Lord Hunt of Kings Heath (Lab): My Lords, I remind the House of my interests as chairman of an NHS foundation trust, president of GS1 and a consultant and trainer with Cumberlege Connections. I thank the Minister for repeating the Statement. What happened at Mid Staffs was a betrayal of the NHS and its values. The previous Government rightly apologised, but now is the time to back our words with action. That is why, in welcoming much of what has been said, I would like to press the Minister on where we feel we would have gone further and question why, of the 290 recommendations from Francis, 86 are not being implemented in full.

First, I pay tribute to my right honourable friend Ann Clwyd, Professor Patricia Hart, Professor Sir Bruce Keogh, Camilla Cavendish, Professor Don Berwick and of course Sir Robert Francis. Between them they have given us proposals that will help to prevent a repeat and, more importantly, change the whole of the NHS for the better.Both Francis reports found three primary and fundamental causes of what went wrong: a failure to listen to patients; a lack of properly trained staff; and a dysfunctional culture. I shall turn to each of those.

First, I am sure that the Minister will agree with me that patients and their families must always, as Francis recommended, be the first priority for the NHS. Was Francis not right to recommend that the NHS constitution and the ethos that it sets out should be required reading for all NHS staff? I congratulate the Minister on agreeing to implement the Clwyd review in full and change the way that the NHS handles complaints.

Secondly, there is the issue of staffing numbers and training. The first Francis report found that Mid Staffs made dangerous cuts to staffing over a short

19 Nov 2013 : Column 862

period. I welcome the Government’s new focus on this issue, but is it not the case that nurse to patient ratios across the NHS have got significantly worse in the past three years, with nearly 6,000 fewer nurses, more older patients in hospital and bed occupancy running at record levels?

It is encouraging that the NHS plans to recruit more nurses and is introducing more monitoring and transparency. The Secretary of State says that things are already changing for the better, but is the Minister aware that Monitor, the economic regulator of the NHS, has warned that trusts are planning major nurse redundancies in the 2014-16 period, far outweighing any increase planned this year? Will the Government intervene to stop that? Further, why have the Government stopped short of requiring safe staffing levels? Is the Minister aware that nurse training places have been severely cut in recent years and that many NHS trusts and foundation trusts are now being forced to recruit from overseas?

Alongside nursing, more action is needed to raise standards across the caring workforce. As Robert Francis has said, it is unacceptable that the security guard at the door of the hospital is more regulated and subject to professional sanctions than the healthcare assistant attending to an elderly patient. The development of the care certificate, as proposed by Camilla Cavendish, is a step forward, but will it not work only alongside a register of those who hold it and with an ability to remove it if they fall short? What happens if a member of staff employed as a care assistant in an NHS hospital has indeed obtained a care certificate but is then found to be wholly unsatisfactory to carry out a care assistant’s work? What happens to the certificate? Surely we need to go back to the Robert Francis recommendation of a system of regulation for healthcare assistants. Will the Government reconsider this decision and at least commit to keeping it under review?

On culture change, Robert Francis’s central proposal is a new duty of candour on organisations and individuals. It is not entirely clear how an organisational duty alone will help individuals challenge an organisation where there is a dysfunctional culture. Is it not the case that an individual duty, as proposed by Francis, is needed? The point comes over very clearly from the evidence given to Francis from a senior, soon to be retired consultant. He said:

“I took the path of least resistance … There were also veiled threats at the time that I shouldn’t rock the boat at my stage in life”.

It is only when an individual is both required to speak out and protected in doing so that the House can say that it has done enough to safeguard patients.

The duty of openness and transparency should apply equally to all organisations providing NHS services, including, as Francis rightly recommended, contractors providing outsourced services. The Government are clearly bringing in more outside providers. Surely patients need reassurance that we do not have an uneven playing field where private providers face less scrutiny. Will the Government extend the duty of candour to all healthcare organisations as Francis proposes? The amendments to the Care Bill do not seem to make that clear. Should not the Minister commit to extending

19 Nov 2013 : Column 863

freedom of information law to any provider of NHS services and not allowing them to hide behind commercial confidentiality?

On openness, Francis made a direct call on the Government to set an example to the rest of the NHS. He said:

“risk assessments should be made public, and debated publically, before a proposal for any major structural change to the healthcare system is accepted”.

Given the Government’s claim to have accepted this recommendation, should they not show what they mean by finally publishing the risk register on the current reorganisation of the NHS?

Finally on openness, the NHS will be more accountable to families with a proper system of death certification. The House will recall that this was a core recommendation of Dame Janet Smith’s inquiry into the Shipman murders. The Francis recommendations on this are not all accepted in full. I hope that the Minister will be able to give me some reassurance on that.

I would also like to ask the Minister about the regulatory structure. I have raised with him before the question raised by Don Berwick in his very interesting report on patient safety, which the Government themselves commissioned. In that report he said:

“The current NHS regulatory system is bewildering in its complexity and prone to both overlaps of remit and gaps between different agencies. It should be simplified”.

He went on to say:

“The regulatory complexity that Robert Francis identified as contributing to the problems at Mid Staffordshire is severe and endures, and the Government should end that complexity”.

Has the Minister picked up on the comment made by the chair of the CQC to the Health Select Committee in October, where he said that responsibility for patient safety in the health service should be transferred back from NHS England to the Care Quality Commission? Will the Minister agree that that is the right thing to do?

Can I also ask about the impact of competition on patient safety? The Minister may well have seen reports at the weekend that there are proposals to centralise cancer services in first-class treatment centres in order to enhance the efficiency, safety and effectiveness of the treatments being offered. Is he as shocked as I am that there has been a challenge to those proposals on the basis that they may run against the competition rules set out in the regulations that the Minister brought to this House in relation to Section 75 of the Health and Social Care Act 2012? Will the Minister look into those circumstances?

Finally, can I ask about the National Patient Safety Agency? In his Statement, the Minister referred to the fact that there will be a duty on staff to report near misses. He will be aware that the previous Government established the National Patient Safety Agency to allow staff to report those near misses. Is he as concerned as I am that the abolition of the NPSA and the transfer of the listening and reporting function to NHS England may, in itself, act as an inhibitor to staff feeling confident in reporting those safety incidents?

Finally, does the Minister believe—

Noble Lords: Oh!

19 Nov 2013 : Column 864

Lord Hunt of Kings Heath: My Lords, this does not eat into Back-Bench time. I think I am quite at liberty to ask as many questions as I like. Perhaps the party opposite would do me the courtesy of actually listening to the questions. Let me say finally—

Noble Lords: Oh!

Lord Hunt of Kings Heath: My Lords, I am very happy to carry on. We have 20 minutes for Front-Bench questions and answers, and I have not yet taken half that time. I am quite happy to go on but, of course, I want to give the Minister time to respond as well. Perhaps some noble Lords will read the Companion to see what the rules are.

Finally, is primary legislation needed to implement any of these recommendations? I say to the Minister that if that is so, we on this side will certainly co-operate on a cross-party basis to enable those recommendations to be implemented in full.

3.31 pm

Earl Howe: My Lords, first, I welcome the noble Lord’s very positive comments about the various reviews that have been commissioned in recent months. I am glad that he agrees that, in broad terms, the Government are on the right lines in accepting the recommendations that have come forward.

The noble Lord asked a number of questions, the first of which was about why we have not implemented all the recommendations of Robert Francis in full. Most of the recommendations have been accepted in principle, in part or—in the main—in their entirety. In some cases, we are taking an alternative approach to that suggested in the inquiry if we believe it is likely to be more effective in reaching the intended outcome. In total, we have rejected just nine of the 290 recommendations and where recommendations have been rejected, a full response outlining the reasons for doing so and the alternative action that organisations are taking is provided in our system-wide response.

The noble Lord asked about the regulation of healthcare assistants, a matter to which we return at regular intervals in this House. I assure him that the Government keep this issue under regular review but, for the time being, our view is to tackle the key issue at its root, focusing on making sure that healthcare support workers have the right training, values, support and leadership to provide the high-quality care that we all want patients to receive. We are committed to ensuring that this part of the workforce receives high-quality and consistent training. We have commissioned Skills for Care and Skills for Health, as the noble Lord knows, to develop a code of conduct and minimum training standards. We have also announced the development of a care certificate, which I am sure will be particularly welcome to a number of my noble friends.

The noble Lord asked me about a situation in which employers might find that a healthcare assistant or social care support worker no longer met the standards required by the care certificate. In that event, Health Education England and the sector skills council will set out in guidance the requirements for ensuring that appropriate retraining is given or other disciplinary action is taken. The guidance will be that the worker in

19 Nov 2013 : Column 865

question should not work unsupervised until the problem has been resolved and the employer is confident that their care certificate remains valid. Of course, if a healthcare assistant is found to have harmed patients or have been a serious risk to patients, the Disclosure and Barring Service needs to be considered as the ultimate remedy to make sure that that person does not put patients at risk in future. However, that is an extreme situation, which I believe will not be the norm.

The noble Lord referred to the nurse numbers. In the last spending review, the NHS budget was protected in real terms, with cash funding rising by £12.7 billion by 2014-15. Alongside that, Health Education England has been working with NHS trusts to develop the overall workforce plan for England for next year, reflecting the strategic commissioning intentions. That work indicates that a number of trusts have already increased their nurse staffing levels during the current year and others are planning to do so, as I mentioned in the Statement. Initial plans indicate that trusts intend to employ an increase of more than 3,700 nurses this year.

Moving to staff ratios, nursing leaders have been clear—indeed, there is a letter in today’s Times about this—that hospitals should publish staffing details and the evidence to show that staff numbers are right. However, we do not think that prescribing a rigid set of rules from the centre is the right way forward. The National Quality Board and the Chief Nursing Officer are publishing a guidance document that sets out current evidence on safe staffing. By next summer, NICE will produce independent, authoritative, evidence-based guidance on safe staffing and review and endorse associated tools for setting safe staffing levels in acute settings. From next April, by June at the latest, NHS trusts will publish ward-level information on whether they are meeting their staffing requirements. A review every six months will allow for those staffing levels to be quality assured.

On the issue of candour, we have had a number of debates on this subject, both during the passage of the Health and Social Care Act and, more recently, in the Care Bill, and I believe that we have reached a place for which this House can take some credit because the Government have moved a considerable distance from their original position. We agree with Don Berwick’s intention that professional regulators are in the best position to strengthen the duty of candour for individual professionals working in a hospital. Of course, the duty of candour applies to the corporate entity but the GMC and the NMC will be working with the other regulators to agree consistent approaches to candour and the reporting of errors, including a common responsibility to be candid with patients when mistakes occur, whether serious or not, and clear guidance that professionals who seek to obstruct others in raising concerns or in being candid would be in breach of their professional responsibilities. The professional regulators will issue new guidance to make it clear that it is the responsibility of professionals to report near misses for errors that could have led to death or serious injury as well as actual harm, and they must do so at the earliest opportunity. We will seek advice from

19 Nov 2013 : Column 866

experts on how to improve the reporting of patient safety incidents, including whether the threshold for the statutory duty of candour should include moderate harm.

The noble Lord referred to the NPSA. He is right that the NPSA’s function of reporting safety incidents has transferred to NHS England, into which the National Reporting and Learning System has been absorbed. I do not see that transfer as, in any way, inhibiting staff confidence in reporting safety incidents. The essence of the system remains as it always has been.

The noble Lord asked about the responsibility for patient safety being transferred back to the CQC. I am sure that, on reflection, he will agree that patient safety is everybody’s business. In part, it is the business of the CQC but, above all, it is the business of those who work in the NHS. It is the business of trust boards and of commissioners. It is also very much the business of those whose job it is to look at the performance of the NHS on behalf of patients—chiefly Healthwatch, but also patient organisations. Therefore one cannot single out an individual organisation as taking sole responsibility for this.

I will write to the noble Lord about the Freedom of Information Act. However, he should not forget that the standard contract that the NHS operates binds anyone who provides services to the NHS into certain contractual terms, and the disclosure of relevant information is a part of that.

On death certification, the noble Lord asked me about medical examiners. We agree that they must be independent of the deceased person and their medical practitioner. That is because medical examiners need to carry out independent scrutiny of the medical circumstances and cause of apparently natural deaths to make sure that the right deaths are notified or referred to a coroner. However, we need to ensure that there are sufficient numbers of medical examiners to carry out this work, particularly in rural areas, so appointees are likely to have some sort of professional relationship with local care providers. Therefore the draft death certification regulations for medical examiners do not require that medical examiners are independent of the organisation whose patients’ deaths are being scrutinised. However, we are mindful of the need for a greater level of independence within the spirit of this recommendation and the Government will review how they can include further safeguards on this front.

The noble Lord suggested that the NHS constitution was not the right means of changing the culture of the NHS, and I agree with him. However, declaratory statements in the constitution are an important part of signalling to the NHS its vision and values in the broadest terms, and the duties that people should feel they are under. The values, rights and pledges set out in the NHS constitution form the basis of everything the NHS does. NHS England, Health Education England, the department and CCGs are developing a joint strategy to embed the constitution further, as we promised they would during the passage of the Health and Social Care Act.

On the system that we have put in place and the complexity that the noble Lord sees in that system, I say, simply, that the system we now have is more transparent than the one we had before. Accountabilities

19 Nov 2013 : Column 867

are clear, responsibility is clearly placed where it should be and it is backed by robust lines of accountability, including to Ministers and Parliament.

I hope that that answers most of the noble Lord’s questions, but I will of course write to him if I have omitted anything.

3.43 pm

Baroness Brinton (LD): My Lords, we on these Benches welcome both the Francis report and the Government’s Statement. In particular, we welcome the importance of openness, transparency and access to information to ensure that there is a change in culture. Can the Minister confirm that the new care certificate will be an NVQ qualification so that the public can be confident that staff have the right skills and training? We would also welcome registration and regulation for those staff in the way that the noble Lord, Lord Hunt, referred to earlier. Can the Minister also confirm that when complaints and other items have to be published, it will not be as a few lines in an annual report but on the web, and that it will easily accessible by patients and the public?

Earl Howe: My Lords, I very much agree with the spirit of my noble friend’s questions. Certainly as regards complaints, the public should have a clear view of the nature of the complaints that have been registered with a particular organisation. They should be able to have a sense of what those complaints relate to and what action the organisation has taken to address the matter in question.

On my noble friend’s first point, we are currently working through the question of the care certificate and will seek advice. It is important to arrive at an agreed formula that gives the maximum assurance, both to care assistants and to those they look after, that basic standards of training have been learnt and are being adhered to. It is important to define as closely as we can what we mean by that, and as soon as we have further details we will announce them.

Lord Patel (CB): My Lords, I thank the Minister for repeating the Statement, and I welcome the Government’s comments on the Francis report. I apologise on behalf of my noble friend Lady Emerton, the matron, who is not here today as she is unwell, and also my noble friend—he is a friend, although he sits on the wrong Benches—Lord Willis. He cannot be here because he has been asked to undertake the duties of my noble friend Lady Emerton. They asked me to represent their views—which I will not do, because I would get them wrong, but perhaps I may make my own comments. I realise I am not allowed the same time as the noble Lord, Lord Hunt, had. That is a pity, because I have much to say about the Statement.

I welcome the statutory requirement to give notification of any harm or serious misses that have happened. During my time as chairman of the National Patient Safety Agency I tried to get that into statute and failed; it was not under the current Government, but that does not matter. I am therefore delighted that this will be a statutory requirement. The important thing is that, as Don Berwick said, this is about learning; reporting by itself is not enough. The Minister referred

19 Nov 2013 : Column 868

to the airline industry, which learns from what has happened by doing root-cause analysis. We need that system established in the NHS if we are to learn from avoidable harm and near misses. Whose responsibility will it be to do that, and how will that expertise be gained?

On staffing ratios, the Minister knows that if my noble friend Lady Emerton had been here she would have asked about ratios of trained to untrained staff. Now that there will be a new care certificate to ensure training for all care assistants and nursing assistants, which I welcome, she would have asked for regulation. However, we have passed that stage, and I welcome the fact that there will be a new care certificate following the training. Why, however, is all this to be only for hospitals? What about care homes? Why were care homes excluded from reporting on staffing ratios?

Earl Howe: I apologise, but I did not quite hear the last part of the noble Lord’s question. Was it why care homes were excluded?

Lord Patel: The Statement refers particularly to hospitals. They will have to report on staffing ratios, but it did not say that care homes will have to do that.

Earl Howe: I am grateful to the noble Lord. I am in complete agreement with him on his first point. The best thing might be for me to read out a very short passage from Professor Don Berwick, who said:

“The best keys to health care safety do not lie in blame, or regulation, or punishment, but rather in learning, support, and encouragement to the health care staff, the vast majority of whom are dedicated to excellence in care.

Leaders who aim for safe and effective care have a duty to supply the workforce with the tools, knowledge and encouragement to do the work that adds meaning to their lives”.

We have attempted, as far as we can, to make that philosophy the guiding principle of our response on patient safety. We do not want to create a blame culture; we want to create a culture that encourages everybody to feel ownership of the work that they do, and to feel well led. That is the other side of the coin to the culture that we have spoken about in other debates about innovation—about making innovation everybody’s business in an organisation. It comes down, in the end, to good leadership.

We are not insisting that every organisation should carry out root-cause analysis. On the other hand, we are saying that it is the business of trust boards to make complaints, mistakes, and lapses in patient safety central to their work and to the scrutiny that they undertake of their organisations, and for those matters to be discussed openly and resolved openly.

As regards care homes, as I said, we have commissioned NICE to work through the guidance that will underpin safe staffing. It is not yet apparent whether that will cover care homes and it is difficult to see how it could do so because care homes are clearly very different organisations from acute trusts. On the other hand, we expect the CQC to have some way of judging whether a care home can call itself safe. We will certainly look at the noble Lord’s points as we carry that work stream forward.

19 Nov 2013 : Column 869

Baroness Pitkeathley (Lab): My Lords, I am sure it will be welcome to patients and their families that the name of a responsible consultant will now be above the patient’s bed, but will the noble Earl say a bit more about the new attention to 75 year-olds that has been promised? In the extensive leaks of the Government’s response over the weekend, GPs were definitely named as the people who would be responsible for the over-75s. The Statement refers to “a named accountable clinician”. Is there a difference between the two?

Earl Howe: Yes. There were no leaks. The report that the noble Baroness saw was a report on the new GP contract that we announced at the end of last week. That was legitimate reporting by the press of an element of the new contract for next year, when we want all NHS patients over the age of 75 to have a named, accountable GP. However, we are saying in this response that every patient in a hospital setting should know who their consultant is, and therefore that there should be a named responsible consultant for every hospital patient. The two issues are, therefore, related but different.

Lord Mawhinney (Con): My Lords, the Statement said that the NHS has to be a moral organisation or it is nothing. I am sure that my noble friend carried the whole House with him when he said that. Therefore, the raft of changes and the new legal accountability that will come in next year are very welcome in their own right as they will bolster that concept. However, how is it that no individual or individuals have been held accountable for the tragedy and disaster at Mid Staffordshire? I know that my noble friend keeps saying, on behalf of the Government, that they do not want to encourage a blame culture, but will he explain to your Lordships’ House how we can have an accountability structure without any blame attached?

Earl Howe: My Lords, the trust board at Mid Staffs was ultimately responsible, and individuals on it have been replaced. That was the first step in holding the system to account. We are introducing strengthened accountability for the future, including a fit and proper persons test for directors, as well as a single-failure regime triggered by failures in care. We have also appointed a Chief Inspector of Hospitals with power to ensure that the system acts quickly to tackle unacceptable care. In a range of ways I hope that we have addressed the central point in my noble friend’s question, which is very well placed.

Baroness Masham of Ilton (CB): My Lords, I am pleased to hear about the transparency and the duty of candour, but will the noble Earl give the House an assurance that patients will be listened to? I am thinking about the young man who implored staff for a drink, and even telephoned the police on his mobile, but was ignored by staff. This was not Mid Staffordshire but a London teaching hospital. Further, will staff be protected when they blow the whistle? Will the noble Earl give an assurance that they will not lose their jobs?

Earl Howe: My Lords, I completely agree with the noble Baroness that the voice of the patient is an essential part of maintaining a culture of safety in the

19 Nov 2013 : Column 870

NHS. Improving the way in which the NHS manages and responds to complaints will be critical in shaping a culture that listens to patients and learns from them and ending a culture of defensiveness or, at worst, a culture of denial about poor care. That is why we welcome and accept the spirit of the review of the NHS hospital complaints system by Ann Clwyd MP and Professor Tricia Hart and the principles behind their recommendations.

On whistleblowers, the amendments to the NHS constitution have enhanced the protection for whistleblowers, but we are not complacent and we are already considering whether there is a need for more developments both to protect whistleblowers and to ensure that action is taken, where necessary, in response to concerns. We are looking, with the national regulators, at how whistleblowing concerns are dealt with at the moment and, where appropriate, we will introduce improvements to systems in the future.

Baroness Knight of Collingtree (Con): My Lords, much of what my noble friend has said has given us satisfaction, but it is perfectly true, as we have already been reminded, that troubles were going on not only in the Mid Staffordshire area but all over the place. It is also true that it is not just the whistleblowers who warned time and time again about what was going on and who should have been listened to. I spent four or five years raising cases of people who had written to me. On one occasion I presented the then Minister, the noble Lord, Lord Hunt of Kings Heath, with a dossier of some 25 cases, all of which had been checked very carefully. All the details were correct, all the patients, or their relatives, had given permission for these cases to be raised and they were raised in this House. I am not blaming the noble Lord for failing to take these cases forward, or failing to listen to the arguments put out clearly in this House, because I think that he passed them on, but they were never properly investigated.

It is upsetting that for such a long period warnings were being given and were allowed somehow to filter into the ground and away, or into the past. I particularly warned about the practice, which was fairly unknown at that time, of failing to feed patients because food was put too far away from them and other examples. I worry about the people who suffered for those long years when something could have been done if those responsible at the grass roots had taken care of what was being said in this House. I beg the Minister not to leave aside the really serious point that cases raised with great sincerity and truth in this House should be regarded and not just pushed aside in the future.

Earl Howe: My Lords, my noble friend should be listened to with great care. Of course, I remember those cases. I was not the Minister in charge at the time she submitted those cases to the Department of Health, but she shared them with me, and I share her concerns, which are, of course, directly relevant to the matters we are discussing today. We have the new duty of candour and in April the Enterprise and Regulatory Reform Act strengthened the main whistleblowing legislation introduced by the Public Interest Disclosure Act so that an individual who suffers harm from a co-worker as a result of blowing the whistle now has the right to expect their employer to take reasonable

19 Nov 2013 : Column 871

steps to stop this. The idea is to ensure that people do not feel intimidated from speaking up. The Care Quality Commission is using staff surveys and the whistleblowing concerns it receives as part of the data in its new intelligent monitoring system. That data will guide the CQC about which hospitals to inspect. Since September, the commission’s new inspection system includes discussions with hospitals about how they deal with whistleblowers and handle them.

Baroness Hayman (CB): My Lords, I declare an interest as a member of the General Medical Council. In no way do I speak on its behalf today, but it is obvious from the remarks that the Minister has made that the GMC has been working with the Government and other regulators and is committed to underlining professional responsibilities, particularly in relation to the duty of candour. That work will, of course, continue. On a personal level, I welcome the return to naming the consultant and the nurse responsible for an individual patient. It is emblematic of that personal sense of responsibility and accountability for patient welfare.

In respect of the new complaints procedure, as the Minister said, the care of patients and their safety are the responsibility of not only the named consultant and nurse but everybody in that institution. Does he agree that there is also a particular responsibility on the trust’s non-executive directors in that respect and that the new system should ensure that they are taking their responsibilities seriously? I know from decades ago, when I chaired the complaints panel at a London teaching hospital, that that resource, in terms not only of the ability to protect patients but of improving efficiency and the quality of care by understanding complaints, was a treasure trove that should not be abandoned.

Earl Howe: I entirely agree with the noble Baroness, who of course has immense experience in these fields. I agree with her in particular about the role of the non-executive director. If an organisation has what may look like quite a high number of complaints, it should be regarded as a sign of openness, transparency and the right kind of culture in that organisation. It is only where suspiciously low numbers of complaints have been recorded that alarm bells should start ringing. I agree that boards of directors, led and encouraged in this area by the non-executives, should make it a central part of their business to analyse complaints and make sure that they have been followed through, not just that the matters have individually been remedied but that any systemic issue has been properly addressed.

Energy Bill

Third Reading

4.03 pm

Baroness Anelay of St Johns (Con): My Lords, I have it in command from Her Majesty the Queen and His Royal Highness the Prince of Wales to acquaint the House that they, having been informed of the purport of the Energy Bill, have consented to place their prerogative and interests, so far as they are affected by the Bill, at the disposal of Parliament for the purposes of the Bill.

19 Nov 2013 : Column 872

Clause 3: Further duties of the Secretary of State

Amendment 1

Moved by Baroness Worthington

1: Clause 3, page 3, line 39, at end insert—

“(9) Where carbon intensity of electricity generation is reported to have increased year on year for not longer than three consecutive years, starting from the date of Royal Assent, the Secretary of State shall report to both Houses of Parliament, setting out both the reasons for the increase and the additional actions that will be taken to reverse this increase in carbon intensity.”

Baroness Worthington (Lab): My Lords, during our scrutiny we have come to know this Bill as the “decarbonisation Bill” as it has passed through this House. It has been referred to in that way by a number of noble Lords and it is a reasonable description. The Bill represents a significant intervention in the electricity market that is justified on the basis that it will help to decarbonise our electricity system. Noble Lords will be aware that we have had lengthy discussions about the setting of a decarbonisation target in the Bill in order to give that clarity of purpose and to create a responsibility on the Government to deliver through the powers that they are taking. Unfortunately, we were unsuccessful in bringing forward the setting of a date for the setting of such a target. However, on Report the Minister was kind enough to give a partial concession in relation to the Government’s commitment to monitoring carbon intensity and to acting if carbon intensity remained high. The concession was that, should carbon intensity rise year on year for three consecutive years, the Government would report to Parliament, setting out why this was the case and the additional actions that would be taken to counteract that increase.

The concession is welcome. It is not a replacement for a carbon intensity target by any means, partly because carbon intensity is currently at an astonishingly high level. This is because the merit order currently favours inefficient old coal plant over more efficient, cleaner gas stations. Therefore, currently carbon intensity is higher than would otherwise be the case. Intensity seems unlikely to increase. If it did, something would be seriously awry with government policy. The concession, while welcome, does not go far enough but I should hate to lose it. The purpose of this amendment is to place that commitment in the Bill to introduce into it a measurement of progress and a mechanism through which the Government will report back to the House on that progress and take corrective action.

It is fair to say that the interventions in this Bill and the powers that are given to the Secretary of State are so extensive that they ought to be matched with responsibility and a system of holding the Government to account to see that they are delivering. The measure of progress should be carbon intensity, the issue the Bill seeks to address. Therefore, I hope the Minister will accept this amendment in the spirit of enhancing that important part of the Bill that justifies why it has been introduced and the powers that have been taken. I beg to move.

Lord Teverson (LD): My Lords, this is a worthy amendment. However, Parliament is grown-up enough for those of us who are interested in these issues and

19 Nov 2013 : Column 873

see them as really important to notice what happens and seek answers from the Secretary of State and the Government about carbon intensity. The issue is important but the amendment adds little to the Bill.

The Parliamentary Under-Secretary of State, Department of Energy and Climate Change (Baroness Verma) (Con): My Lords, I thank the noble Baroness, Lady Worthington, for tabling the amendment. The Government fully support the aim of clear and transparent reporting. However, like my noble friend Lord Teverson, I do not think it necessary to introduce an additional statutory reporting requirement to the Bill as the noble Baroness proposes. I shall set out quickly the reasons.

First, as the noble Baroness recognises, at Report I made a commitment to Parliament that the Government would undertake reporting measures once any decarbonisation target range had been set. This would supplement those reporting measures that are already included within Part 1 of the Bill. I repeat what I said on Report, which was that,

“where carbon intensity is reported to have increased year on year for three consecutive years, the Government will explain the reasons why, and, where appropriate, report additional actions to address it within the annual statement of grid carbon intensity”.—[Official Report, 28/10/13; col. 1366.]

Secondly, it is important to recognise that, under the Climate Change Act 2008, there are already high levels of scrutiny of the progress made to meet our economy-wide carbon targets. This includes coverage of the power sector within the context of our wider economy. For example: the Government currently report annually on emissions in the power sector through the UK’s greenhouse gas emissions inventory; the Committee on Climate Change publishes an independent and impartial report each year on our progress towards meeting our carbon budgets and the 2050 target; the Government provide annual responses to the committee’s recommendations, which include a dedicated chapter on the power sector; and the Government publish updated energy and emissions projections each year, setting out the future trajectory we anticipate the economy taking.

Lastly, the amendment proposes that these reporting measures start from the date of Royal Assent. The Government’s view is that it is logical for any additional reporting measures to be triggered by the setting of a decarbonisation target range rather than by the enactment of the Bill. That would ensure alignment with the existing reporting framework that is already included in Clause 3, and we should not forget that we already report on grid carbon intensity ahead of any decarbonisation target range being set. Section 5 of the Energy Act 2010 requires a three-yearly report to Parliament on progress in decarbonising electricity generation. That report sets out the policy framework and explains trends in grid carbon intensity over the reporting period.

In conclusion, the Government are already proposing a clear and robust target framework that includes regular reporting on progress in meeting any target range. That is in addition to the high levels of scrutiny that are already in place to meet our economy-wide carbon targets. For those reasons, it would be unnecessary

19 Nov 2013 : Column 874

to introduce another statutory reporting requirement. I hope that the noble Baroness will agree with me that the existing commitments are sufficient and will, on that basis, withdraw her amendment.

Baroness Worthington: I am grateful to the Minister for her response and for the contribution from the noble Lord, Lord Teverson. I agree that we are all mature in looking at these things and that people who scrutinise and follow this in detail will raise issues as they occur. However, something is clearly not working, otherwise why is it that carbon intensity has been allowed to rise to such high levels recently with the Government apparently incapable of acting to bring it down? Obviously, many factors play into that, but the whole purpose of the Bill is to bring some of those factors under greater control and to allow the Government to intervene in the market to create contracts for difference that bring forward investment in the low-carbon economy that would not otherwise be supported by the market.

There is a problem, given that carbon intensity remains stubbornly high; the measure of the success of the Bill will be that starting to fall. It is regrettable that the Government are not prepared to start monitoring that or reporting on it, in terms of actively managing it, until 2016, which is a number of years away. I understand that the Bill has existing requirements on reporting carbon intensity, and that it is routinely reported now, so I am happy to withdraw, but this is something we need to keep a close eye on. I am sure that the noble Lord, Lord Teverson, and others will join me in ensuring that we do just that.

Amendment 1 withdrawn.

Clause 34: Power to make capacity market rules

Amendment 2

Moved by Lord Jenkin of Roding

2: Clause 34, page 22, line 10, after “is” insert “, or who has notified the Secretary of State of his intention to become,”

Lord Jenkin of Roding (Con): My Lords, Part 2, which is really the heart of the Energy Bill, contains all the proposals for the reform of the electricity market. Chapter 3 of Part 2, in respect of which I am moving this amendment, deals with a very important part of the reform, the introduction of the capacity market. As the noble Baroness has just mentioned, that is of course designed to try to attract investment which the market might otherwise find it difficult to support. It is one of the measures that the Government are introducing, if I may put it crudely, to keep the lights on—to make sure we have enough generating capacity to keep the power flowing. At this stage of the Bill, I do not think it is necessary for me to start spelling out all the details of this, which have been very substantially debated at Second Reading, in Committee and on Report.

However, I think it right once again to draw the attention of the House to the fact that most of the detail of this is to be in regulations. We are hoping that

19 Nov 2013 : Column 875

the Bill will be Law before the end of the year—indeed, I hope well before the end of the year—and that the regulations will follow next year, and we are waiting for those. I have to say to my noble friend that the Government have been extremely good at producing drafts of what all the really important regulations would contain. It is a substantial document and I do not propose to read it out, but there is an enormous amount of detail in it and it is helpful for those who have to operate the new system to have that detail now.

4.15 pm

In addition to the regulations, there will also have to be what are called capacity market rules. They will either be made by Ministers, or can be made by the regulator, Ofgem. Again, in that document we have been given draft rules and I will come to them in a moment. Both the rules and the regulations are currently the subject of consultations and, while this is clearly essential to get them right and to make sure that they avoid unintended consequences, it means that even at this late stage of the Bill, it is not really open to us to debate the details. What we can ensure is that the Bill provides the necessary rules and guidance to what we think the Government ought to be aiming at in making these regulations, and that the processes by which they are made are sound and fit for purpose.

That is really what this amendment is about. It is Clause 34 that confers on the Secretary of State the power to make the capacity market rules. As I said, it is Clause 34(3) which gives the power to the “Authority”. That is the phrase used in the Bill, but that means giving the regulator, Ofgem, the power to make capacity market rules subject to conditions. These conditions may be about consultations, and in particular, they must provide that if it is Ofgem which is to make the capacity market rules, it must consult and then set out two categories of what one might call the participants in the scheme—either anyone who has a licence to supply electricity or anyone who is already a capacity provider.

It is my view that this leaves out an important group. Ministers have recognised that in order to promote competition—there will be a great deal more about competition on the next amendment that I will move—it is important that new entrants and independent generators should be enabled, or indeed encouraged, to apply for a contract under the capacity market arrangements. They may very well not already be licence holders, and by definition they are almost certainly not yet capacity providers. My amendment provides that, in addition to those two categories in the Bill, there should also be included anyone,

“who has notified the Secretary of State of his intention to become”,

a capacity provider.

How important is this? I have already demonstrated that in this volume the draft rules cover no fewer than 119 pages. They are immensely complicated; the definitions alone cover 20 pages, which gives a measure of the complexity of all this. They cover such vital issues as the timetable for the capacity auctions, how those wishing to bid could gain the necessary prequalification, how to decide who is eligible to bid, how the auctions will be conducted and so on. This is all highly relevant to anyone who is going to take part in these auctions,

19 Nov 2013 : Column 876

especially new entrants and independent generators that are aiming to participate in the market. Surely it is as important for these companies to know about the rules and any proposed changes to them as it is for firms already operating in the industry. It is a very simple question and I think that the answer can only be: yes, they must know about them. I hope my noble friend will give us satisfaction. I beg to move.

Baroness Worthington: My Lords, we support the amendment moved by the noble Lord, Lord Jenkin. Possibly it is merely an oversight that those who wish to become capacity providers are currently excluded from the list of consultees. As the noble Lord has explained, this part of the Bill is very important and should be open to new and independent players to attract them into the market. If all the capacity mechanism does is provide security to the existing incumbents, it will have failed in its aim to deliver capacity at least cost, with a good degree of competition enabling prices to be kept to the minimum. Given the context, it is an eminently sensible amendment and I really hope that the Minister will be able to support it.

Baroness Verma: My Lords, I thank my noble friend Lord Jenkin for his amendment. Both the electricity capacity regulations and the capacity market rules form the legal framework that will enable the introduction of the capacity market. The capacity market rules will be subsidiary to the regulations, for which the Secretary of State will continue to have responsibility.

Much of the content of the capacity market rules will comprise provisions of a technical and administrative nature, designed to supplement the regulations and ensure the efficient running of the capacity market; for example, the rules will set out how the delivery body is to conduct capacity auctions and the pre-qualification process, as well as its duties to maintain a capacity market register and carry out monitoring and testing.

Given the technical and administrative nature of the rules, we therefore expect changes usually to be of a minor and technical nature, with the primary purpose of ensuring the efficient operation of the capacity market. It is important to make the duty to consult on those changes proportionate, and to get the balance right between consulting widely and implementing the change within an appropriate timeframe.

Potential capacity providers may not necessarily be affected by a proposed rule change in the same way as existing capacity providers; for example, existing providers will have rights or obligations under the capacity market that might be affected by a change in the rules. I am therefore of the view that potential capacity providers should not be added as parties that the authority must consult on every proposed change.

Nevertheless, it is important that if the authority were to propose a significant change to the rules that affected a wider range of parties, consultation on that change should go beyond existing suppliers and capacity providers. I therefore reassure my noble friend that we expect the authority to consult more widely, as appropriate, for any significant changes to the rules that might affect a wider range of parties, such as prospective capacity providers. This is reflected in the draft electricity

19 Nov 2013 : Column 877

capacity regulations 2014, published for consultation in October, which would oblige the authority also to consult the Secretary of State, the delivery body and,

“such other persons as the Authority considers it appropriate to consult”.

The authority will be producing guidelines on the process it intends to follow for making changes to the capacity market rules, including its processes for consultation and for considering rule changes proposed by a third party. The authority intends to publish these draft guidelines next spring before finalising them, allowing all potential capacity providers the opportunity to comment on them.

I hope that my noble friend has been reassured that the consultation provision in the Bill is not exhaustive and that the authority can, and will, consult more widely where appropriate. I hope, therefore, that he will withdraw his amendment.

Lord Jenkin of Roding: My Lords, I am extremely grateful for the support from the noble Baroness, Lady Worthington, and it is very nice to know that if I had decided to divide on this I would have had her party with us. However, my noble friend has indeed been reassuring. I entirely accept that all these people should not be consulted on every minor change, but she has given us a clear assurance that, on anything of any significance, both the department and the regulator will consult all those who might reasonably expect to be affected. On that basis, I am happy to withdraw the amendment.

Amendment 2 withdrawn.

Amendment 3

Moved by Baroness Verma

3: Clause 34, page 22, line 15, leave out paragraph (b)

Baroness Verma: My Lords, government Amendment 3 responds to a recommendation from the Delegated Powers and Regulatory Reform Committee regarding delegated powers in the capacity market. I am grateful to the committee for its recommendation and to my noble friend Lord Roper for raising it on Report. Amendment 3 will limit the powers of the authority to make capacity market rules and to confer additional functions on itself when exercising powers under Clause 34(3). It will do this by requiring the authority to obtain the Secretary of State’s consent on each occasion that it seeks to confer a function on itself when making capacity market rules. This will ensure that there is a sufficient level of oversight when the authority makes changes to the capacity market rules. I hope that my noble friend finds the explanation of my amendment helpful and I beg to move.

Lord Roper (LD): My Lords, I thank the Minister for having put forward this amendment which, as she says, follows the discussion that we had on Report and the report of your Lordships’ Delegated Powers and Regulatory Reform Committee. It is a most satisfactory amendment and, again, I thank the Minister for it.

19 Nov 2013 : Column 878

Lord Grantchester (Lab): My Lords, after much debate in Committee and on Report we also welcome this further government amendment in response to the 11th report of your Lordships’ Delegated Powers and Regulatory Reform Committee, which was published at the end of October. It is indeed important that no blanket powers or consents should be given for making particular categories of rules.

Amendment 3 agreed.

Clause 57: Duty not to exceed annual carbon dioxide emissions limit

Amendment 4

Moved by Baroness Worthington

4: Clause 57, page 56, line 13, after “station” insert “with units emitting through a common stack”

Baroness Worthington: My Lords, this amendment follows on from our discussion about the decarbonisation aspects of the Bill. Noble Lords will be aware that an important amendment was successfully added to the Bill at Report. It would close a current drafting loophole in the Bill that would allow old, inefficient, polluting coal stations to upgrade and seek extensive life extensions without the need to comply with any kind of emissions performance standard. This will now, of course, be debated in the Commons, and we look forward to seeing the results of that.

However, in succeeding in having this part of the Bill accepted, an interesting definitional issue has arisen. Bear with me as I try to explain it. The industrial emissions directive, which requires tightened quality standards to apply to coal stations from 2016, applies at a station level. A station is defined as “a common stack”, meaning a chimney that can be used by multiple units. This has interesting implications because the EPS limits can therefore be met by one unit upgrading to fit filters while another unit remains unabated but still operating unencumbered and at full capacity. Our intention in closing a loophole that could potentially extend coal’s life span to late into the next decade was that the EPS should apply at the same level at which the IED applies, meaning that if a station with four units decided to retrofit two of the four in order to comply with the IED, the station as a whole would then be caught by the EPS.

4.30 pm

We have had representations from industry asking for clarification on this because, in sitting down to work out the implications of the amendment, they have looked at the Bill and seen that the definitions are not clear. The Bill defines a “plant” as a “station”, which is insufficiently precise when one is trying to assess this, because plants are made up of units. The definitions used in air quality standards use “common stack” for that purpose. The amendment would bring greater clarity to the EPS part of the Bill and bring it in line with the definitions in the industrial emissions directive. The implications of the Bill could then be understood by those making investment decisions on whether to upgrade their plant or to opt out, run their hours out and close.

19 Nov 2013 : Column 879

I hope that I have made that clear—I fear that I may not have done because it is very complicated. To put it in its simplest terms, the Bill is insufficiently clear on these definitions of what constitutes a station and we have tabled this amendment to address that. I hope that the Minister will be able to accept it. I beg to move.

Lord Oxburgh (CB): My Lords, I support the amendment. The noble Baroness, Lady Worthington, is too modest. She has made it abundantly clear that clarity is needed in the legislation because, as the wording stands, simply part of an operating unit may be upgraded. I therefore hope that the Government can accept the amendment.

Lord Teverson: My Lords, I welcome the amendment because clarification is needed—and, indeed, I thought that the explanation given by the noble Baroness was very good. I would be very interested to hear the Government’s view on how this issue should be resolved, as it is clearly important for the way in which the industry moves forward.

Baroness Verma: My Lords, I am grateful to the noble Baroness, Lady Worthington, and I hope that I can add a little clarity on the matter she has raised. Under the existing provisions, and save for the circumstances provided for under Schedule 4, the EPS will apply to the entire generating capacity of any new fossil fuel power station consented after the EPS comes into force. For example, where planning consent is given for a new fossil fuel power station, the generating units that comprise the consented power station are, for the purposes of the EPS, the “generating station”.

A generating station will report its carbon emissions under the EU Emissions Trading Scheme and the intention is that those reports will be used to reconcile total carbon emissions in a year against the EPS limit for the generating station, which is calculated using the formula in the Bill—I hope that noble Lords are following me thus far.

In respect of the circumstances provided for under Schedule 4, paragraph 1(1) of Schedule 4 gives the Secretary of State a power to make regulations to apply the EPS to a generating station consented before the EPS came into effect where it replaces or installs an additional main boiler—so where it effectively adds to or renews its generating capacity.

Paragraph 1(1)(b)(iii) of Schedule 4, on which the Government were defeated on Report, would extend the scope of Schedule 4 to enable the Secretary of State to apply the EPS also to an existing generating station that fitted substantial pollution abatement equipment. The exercise of the power to make regulations under Schedule 4 is at the discretion of the Secretary of State, and it would be premature to comment on whether or how that power may be used.

Sub-paragraphs (1) and (2) of paragraph 1 of Schedule 4 together allow the EPS to be applied with or without modifications and to different parts of a generating station. For example, it could be applied to only those units that are new or have replacement boilers or to only those units that have fitted substantial pollution abatement equipment.

19 Nov 2013 : Column 880

While I recognise that the proposed amendment may be one way of determining how the EPS will apply to fossil fuel plant, it does not cater for a wider range of circumstances in the way intended by Schedule 4. The regulation-making power in Schedule 4 provides for alternative approaches and, due to the potential complexities and impacts on existing assets were we minded in the future to exercise these powers, we would want to consult fully on possible options before making regulations. I believe that this would provide a more properly informed debate and I therefore ask the noble Baroness to take my reassurances at this stage and withdraw her amendment.

Baroness Worthington: My Lords, I am grateful to the noble Baroness for her reply. Discretion gives flexibility but equally it gives a lack of certainty for industry. I am not quite sure why this proposal is premature as we need to give clarity to those affected by this Bill as soon as possible. It seems to me that in maintaining this discretion, we are prolonging lack of certainty for the industry. I think that it is very important that we do this consultation quickly and that we give clarity as soon as possible, whether that is through the regulations that follow or in a separate process. I am sure that there are many people sitting in boardrooms around the country looking at their assets, who need to know this information and need to know how the department is interpreting its powers.

If the department is minded to have an EPS apply only to the units which fit the filters that make the upgrade, that will have the very perverse affect of allowing unabated plant—the other corresponding units—to operate indefinitely at very high load factors. That is precisely what we are trying to avoid with this amendment. There is a very strong reason why we do not believe that discretion is necessary and why the definition should be at a plant level. However, I understand that the Government may wish to consult and to seek a little extra time before making this issue fully clear. I hope that that is completed in the shortest time possible, as prolonging uncertainty will make life harder for the industry and investors in deciding what their next move should be following the passage of the Bill. I beg leave to withdraw the amendment.

Amendment 4 withdrawn.

Clause 131: Designation of statement

Amendment 5

Moved by Lord Judd

5: Clause 131, page 101, line 5, at end insert—

“( ) how the Authority shall incorporate social and environmental factors in carrying out its functions.”

Lord Judd (Lab): My Lords, in moving this amendment I remind the House that I am involved in a voluntary capacity in a number of NGOs concerned with the environment.

On Report, the Minister said that energy production and consumption should be sustainable. I remind the House of an important point made by my noble friend Lady Worthington, that we face a “quadlemma” in

19 Nov 2013 : Column 881

which we must tackle climate change, keep bills affordable and keep the lights on without sacrificing social and environmental standards in the process. It is very much in the spirit of this observation that I am pursuing this amendment.

On Report, the Minister helpfully reminded us that Ofgem has social and environmental duties and can consider sustainability when carrying out impact assessments for particular schemes. She also informed us that in future Ofgem’s forward planning must show how it will implement the new strategy and policy statement and that it must report annually on how it is contributing to the delivery of the Government’s policy outcomes. The Minister further explained that the Bill seeks to remove social and environmental guidance provision because it has,

“not achieved coherence between the Government’s energy strategy and the regulatory regime”.—[

Official Report

, 6/11/13; col. 263.]

She explained that it would be replaced by a strategy and policy statement setting out the Government’s strategic priorities. She emphasised that Ofgem must have regard to strategic priorities and carry out its functions in the way that it considers best calculated to deliver the policy outcomes, and argued that this would be a stronger obligation on Ofgem than existed in current guidance.

The Minister undertook to write a letter to me and place a copy in the Library of the House setting out precisely how the Government will satisfy themselves that Ofgem will pay due regard to the effect on the environment of activity connected with the conveyance of gas through pipes or the generation, transmission and distribution of supply of electricity, including what measures, benchmarks and associated matters will be taken into account and used in establishing those benchmarks. The Minister has indeed written to me and the letter is in the Library, and I am grateful for the detailed advice about Ofgem’s various duties and responsibilities. However, I am afraid that her letter failed to establish how social and environmental safeguards would be implemented, not weakened, by the Bill.

We seem to be in a circular argument. As I explained in some detail on Report, the strategic priorities set out in the Ofgem policy statement are functions to which the principal objective and general duty is applied. This duty is to be found in Section 4AA of the Gas Act 1986, with equivalent provisions in the Electricity Act 1989. These provisions make it clear that the principal objective is to protect the interests of existing and future customers of electricity and, wherever appropriate, to promote competition. They are not about social and environmental considerations.

Furthermore, the Bill has been set out in such a way that, should the Secretary of State decide to issue social and environmental guidance in future, it would be subordinate to Ofgem’s commercial responsibilities. I have taken into account counsel’s advice that the reality will be that if the Bill is enacted as the Government propose, the explicit responsibility to issue social and environmental guidance will disappear. There is nothing in the Minister’s letter that indicates how it will be replaced. To be crystal clear about this, it is not a

19 Nov 2013 : Column 882

requirement that the strategy and policy statement should cover social and environmental issues, which it should if the present level of protection is not to be significantly weakened. My own views remain unchanged: Ofgem’s social and environmental responsibilities will be weakened by this legislation. If that is not the Government’s intention, there should be a clear statement in the Bill that the Secretary of State will indeed provide social and environmental guidance to the regulator in the strategy and policy statement. This small amendment would achieve that.

Even at this stage, I ask the Government to think very carefully about this and ask themselves: where is the vision? What does the word “sustainability” really mean? What sort of environment do we want to be living in, in future? What of the incalculable psychological and emotional value of landscape and its contribution to national well-being? If the Government recognise the quadlemma to which my noble friend referred and wish to address it, what are they actually doing to avoid the gradual destruction of the natural environment in their pursuit of energy goals? If current policy is anything to go by—it all seems to be about streamlining development—the answer seems to be not a lot. In short, it seems to be the Government’s express intent to remove environmental safeguards in the quest for growth. I beg to move.

Viscount Ridley (Con): My Lords, I support the noble Lord, Lord Judd, in his amendment. I declare my interests as listed in the register.

I have only one minor correction to make. It is very important to draw attention to the fourth leg of the quadlemma, but we should really be calling it a tetralemma if we are going to be consistent in Greek. It is important that the concerns that the noble Lord has raised, which are vital to communities all over the country, about the desecration of landscapes that is being visited on them should be taken seriously. I look forward very much to what I hope will be a reassuring reply from the Minister.

Lord Jenkin of Roding: One thing which seemed to be missing from the letter to which the noble Lord, Lord Judd, referred was the role of the Environment Agency. I have raised this before. There are two separate agencies. There is Ofgem, as the regulator, and then there is the Environment Agency, which has some very specific responsibilities in this direction. When my noble friend replies to the debate, I hope she will put this in context.

I totally understand the point that has been made by the noble Lord, Lord Judd. I will not use the Latin, but the trouble is that what you put into one list automatically excludes anything else. That is a canon of legal construction. My noble friend has made it very clear that when there was a list of people who would be looked after socially—the disabled and chronically sick, those of pensionable age, those on low incomes and those residing in rural areas—that should not be taken as implying that regard might not be had to the interests of other types of consumer. That statement was made by the Minister, obviously on advice, so that I think the social thing is all right, but I accept the point that my noble friend Lord Ridley

19 Nov 2013 : Column 883

has made. We need to make sure that the environment is properly protected, but I had always understood that that was primarily the responsibility of the Environment Agency and other similar organisations. I hope that my noble friend can put this into context.

4.45 pm

Baroness Whitaker (Lab): My Lords, I, too, would like to record briefly my support for my noble friend’s amendment. The Minister’s letter is helpful, although I received it in a very roundabout way, but I do not think it goes far enough. There is a lot at stake here. Our environment is precious and is also vulnerable. Unless these safeguards are explicit in the way that my noble friend has drafted I am sure that they will come second to other considerations.

Lord Teverson: My Lords, one of the things that I certainly enjoy when I get up when I am at home is seeing a living countryside rather than the one bathed in aspic, as some of my colleagues sometimes talk about. It is great to see a countryside that is there alive helping to generate the power that we need for this country and for its economy to move forward. It is a great delight to me and to many of my colleagues.

Baroness Worthington: I support my noble friend’s amendment. Getting the regulator to incorporate social and environmental factors was a hard-fought battle. It would be a great shame if the passing of this Bill should see us going backwards on that front. I am grateful to the noble Viscount for the correction, although I prefer quadlemma, because we can then talk about the effect that Cuadrilla will have on the quadlemma. I look forward to the Minister’s response.

Baroness Verma: My Lords, I thank the noble Lord, Lord Judd, for his amendment and for raising the matter of Ofgem’s social and environmental duties. I recognise the importance that the noble Lord and others attach to this. It is recognised in primary legislation, which sets out Ofgem’s duties, including those concerned with environmental sustainability and social issues. The noble Lord will be aware that Ofgem has other duties, including its principal objective to protect consumer interests, including their interest in a reduction of greenhouse gases and security of supply, as well as duties to promote efficiency and economy and the need to ensure that energy businesses are able to finance their activities.

The Government recognise that Ofgem’s role to a large extent is concerned with identifying what is an appropriate balance between all of those different objectives. This is a case of an independent economic regulator. The Government’s principles of economic regulation state that,

“regulatory decisions are taken by the body that has the legitimacy, expertise and capability to arbitrate between the required trade-offs”.

In the case of energy, that body is, of course, Ofgem.

We are introducing the strategy and policy statement as a result of the Ofgem review, which concluded that this was necessary to provide more coherence between the Government’s strategic energy priorities and the way Ofgem regulates the energy sector. It is crucial,

19 Nov 2013 : Column 884

however, that the statement should not undermine independent regulation. The review also concluded that Ofgem should remain responsible for the consideration of trade-offs between economic goals and broader goals, including social and environmental matters. That is why Ofgem will now have additional duties to take into account the contents of the statement when carrying out its own regulatory functions, which will stand alongside its existing duties. As before, Ofgem will be expected to continue to achieve the appropriate balances between its objectives.

The strategy and policy statement will set out the Government’s strategic policy and identify policy outcomes which are relevant to what Ofgem should achieve, but it will not specify how Ofgem should act to achieve these outcomes or specify outcomes in a way that would compromise Ofgem’s independence. It is not necessary to restate Ofgem’s objectives within the strategy and policy statement and it would not be appropriate to include text which could be seen as directing Ofgem on how it should interpret its duties.

I repeat my previous reassurances that we will take social and environmental matters into account when we draft the strategy and policy statement and that there will be opportunities for interested parties to comment on its contents when we consult next year. Both Houses will be able to consider the contents of the statement before it is designated.

My noble friend Lord Jenkin raised the role of the Environment Agency. Ofgem is a regulator of the energy sector and the strategy and policy statement is aimed at achieving coherence between government energy policy and regulatory actions. It is not aimed at doing the work of the Environment Agency which, as my noble friend rightly said, is a duty on that agency.

However, the noble Lord, Lord Judd, and others have raised important points about visual amenity and other environmental concerns. Existing planning and environmental habitat legislation are operating in tandem with national policy guidance on planning matters. This provides the framework to ensure that this is done, and done properly. Environmental impacts are considered at all stages of the planning process, from the development of proposals by applicants, including, for example, through preparation of environmental statements, to consideration by the Planning Inspectorate and final determination and assessment by the Secretary of State. Environmental considerations are also taken into account when government are taking policy-making processes. Key guidance on considering planning for nationally significant infrastructure projects is contained in the national policy statements.

There is a lot already out there for Governments to utilise so, given all those reassurances, I hope that the noble Lord, Lord Judd, feels better reassured and will therefore withdraw his amendment.

Lord Judd: My Lords, as I have said before, I have no doubts whatever about the Minister’s good will. What I am concerned about is the muscle that will ensure the objectives for which I have been arguing. I listened carefully to the words of the Minister. I am of course an optimist by nature and I hope that what she said will lead to the right conclusions. I would, however,

19 Nov 2013 : Column 885

be misleading the House if I did not say that I have a profound sense of foreboding of another grim slide downwards in the character and quality of our countryside. This really is a profoundly serious issue. We shall see what happens but I hope I am allowed to say that I am absolutely confident that if this Government fail to reverse the trend, it will be reversed by the future Labour Government who, after all, will be the heirs to all that fine and imaginative legislation between 1945 and 1951 which enshrined the importance of the countryside in our national profile. I beg leave to withdraw the amendment.

Amendment 5 withdrawn.

Amendment 6

Moved by Lord Jenkin of Roding

6: Before Clause 139, insert the following new Clause—

“Secretary of State able to amend Authority’s powers after review

(1) If a formal review of the regulation of competition in the energy industry discloses that the Authority lacks the powers necessary to implement any changes recommended in that review, the Secretary of State may make regulations to amend the Authority’s powers so as to enable it to give effect to those changes.

(2) Regulations are to be made by statutory instrument.

(3) An instrument containing regulations which make provision falling within this section may not be made unless a draft of the instrument has been laid before and approved by a resolution of each House of Parliament.”

Lord Jenkin of Roding: My Lords, this amendment is also in the names of my noble friend Lord Roper and the noble Lords, Lord Berkeley and Lord Cameron of Dillington. I am very glad to see the noble Lord, Lord Cameron, back in his place; he sent me the first e-mail from Ethiopia that I have ever received, only a day or two ago. I cannot promise to be quite as brief with this amendment as I was with the previous one that I moved.

The House will remember that on 31 October my noble friend Lady Verma repeated a long Statement about the Government’s energy policy, made in the other place by my right honourable friend the Secretary of State for Energy and Climate Change, Ed Davey. Towards the end of that Statement, following an announcement made earlier in another place by the Prime Minister, Mr Davey gave further details of a proposal to set up,

“annual reviews of the state of competition in the energy markets”.

He referred to them as “competition assessments”, to be undertaken,

“by Ofgem, working closely with the Office of Fair Trading and the”,

newly established,

“Competition and Markets Authority, when it comes into being”.—[

Official Report

, 31/10/13; col. 1771.]

As noble Lords will be aware, there is now serious public mistrust of the way in which the regulatory system has been working. The recent spate of announcements of, in some cases, swingeing price increases for energy have simply inflamed that mistrust, so there has been a

19 Nov 2013 : Column 886

cautious welcome to the announcement. I say “cautious” because I think most people remain to be convinced that these reviews will make any difference in practice. They see that, in place of the more than 20 generating companies which we had before 1997, there are now only six major firms which control 92% of the generating market. They also see what they rightly perceive as the failure of the regulator to get tough with the industry, even to the extent of failing to use its existing powers; there can be no doubt about that—I am glad to see my noble friend on the Front Bench nodding her assent.

Last week the Secretary of State delivered what he called “a tough message” when he spoke to the industry’s main trade association, Energy UK. It is a long speech but I will quote just one or two bits of it because it very much reinforces the case for this amendment. Near the beginning of his speech he says:

“Trust between those who supply energy and those who use it is breaking down. You’ve admitted as much to me. For it is so difficult for people to work out what exactly they are paying for, that they fear the big energy companies are taking them for a ride when bills go up. Fair or not, they look at the big suppliers and they see a reflection of the greed that consumed the banks. So this is a ‘Fred the Shred’ moment for the industry to avoid the reputational fate of the banks”.

That was indeed a very tough message. He went on to make the claim:

“The Government and Ofgem have been acting to open up the market, to increase competition, and put consumers in control of where they get their energy, and how they use it”.

I suspect that few people are able to see that that claim has been actually happening.

This is not the time or place to quote more of what I believe was, by any standards, a forceful and effective speech, but I will allow myself one more quote. After making the point that tough and rigorous competition bears down on costs and prices, he referred to the annual competition reviews. He said:

“Competition works. We’ve seen small suppliers gain substantial business on the back of this year’s high price rises. And today’s announcement by”—

he mentioned one of the companies—is, he said, another welcome thing. However, he said, this,

“will only work … when there is a relationship of trust between suppliers and consumers”.

He went on to talk about the reviews which had been announced.

5 pm

Part of the problem has undoubtedly been that, for whatever reason, Ofgem has failed to use its powers. It is, no doubt, true that both the other bodies—the OFT and the new Competition and Markets Authority—will have further powers. However—and here we come to the amendment—what happens if the reviews throw up abuses with which the regulators do not have the powers to deal? Do we have to wait for primary legislation to provide those additional powers? That is why, in the exchanges that followed the Statement given in this House on 31 October, I asked my noble friend:

“Would it not be wise to take powers now in order to avoid having to introduce fresh primary legislation?”.

In her reply, my noble friend started by agreeing:

“The purpose of the review is to enable the regulators, led by Ofgem, to see what needs to happen in order to strengthen competition”.

19 Nov 2013 : Column 887

She then ended:

“If they need extra powers, it is for the Government to ensure that we support them by ensuring that those extra powers are put in place”. —[Official Report, 31/10/13; col. 1775.]

That is quite right. However, she did not answer the question that I had asked, which was: what happens if the extra powers are needed and are not there? Should we not now give the Government power? They could introduce regulations in the Bill that would give regulators extra power. That would be a considerably better solution than to wait for new legislation that might otherwise be necessary.

My noble friend and I had a brief discussion about this yesterday, and she asked me, “What sort of thing do you have in mind?”. Earlier today I drew her attention to the specific recommendations set out last July in a Which? report, entitled The Imbalance of Power. The report is quite long, but I will quote only two bits of it. It said that,

“we’ve found little to give consumers confidence that the prices they pay are fair. The structures of the biggest companies raise serious questions of conflicts of interests. Much price setting and trading is hidden away behind closed doors. The volume of trading and the level of competition in the open wholesale markets are low”.

Those are pretty swingeing criticisms. One then comes to the report’s recommendations, the first of which echoes an amendment that was moved at an earlier stage by the noble Lord, Lord Berkeley:

“Ring-fence supply businesses from generation businesses in vertically integrated companies by requiring a distinct license holder for each business. Which? considers that a natural skewing of incentives exists within the current vertical integration arrangements—reducing the effectiveness of the market to the detriment of consumers. Evidence set out in this report suggests that structures that put supply and generation or production businesses under a single management and governance structure, may impede competition, and so increase … prices”.

I do not know whether, if the review threw up a recommendation that something along those lines had to be done, it would be within the existing powers of Ofgem. But I do know that Ofgem does not seem ever to have considered any such thing in practice, so one wonders whether that is because it does not have the power to do it. The other bodies may have some power; I have not attempted to analyse that—but if there are no existing powers to enforce such a change, and if the reviews find that there ought to be such powers, why should we not give the Government the authority now to introduce regulations to create those powers? Why do we have to wait for other primary legislation?

If the Government were to accept the new clause it would do two things. First, it would demonstrate beyond peradventure to the industry that they are deadly serious about strengthening competition in the industry. Secondly, it might begin to rebuild the trust that the Secretary of State has acknowledged has evaporated. I beg to move.

Lord Berkeley (Lab): My Lords, I support this important amendment. The noble Lord, Lord Jenkin, has fully and clearly outlined the reasons behind it. Many of the concerns probably stem from misunderstandings, intentional or not, as to what Ministers, in particular, mean by the word “competition”. We hear that word a lot, usually in connection with the

19 Nov 2013 : Column 888

price consumers pay for their power, rather than the competition between the generators, or the unfair competition that results from the vertical integration between retail and the generators, which we discussed fully on Report.

The noble Lord, Lord Jenkin, is right to say that trust has broken down. There is a complete lack of transparency, and I do not think that the present structure is fit for purpose. Conflicts of interest seem to abound. I am still surprised that, apparently, Ofgem either does not have the powers or chooses not to use them. It should have done so long ago. Even if there is to be a competition assessment, why do we have to wait for it? Why has it not been done before? However, we are where we are, and as the noble Lord, Lord Jenkin, said, the amendment would be an important addition, as it would avoid several years’ delay if primary legislation were required before any action could be taken.

I would go one step further. If the Minister does not accept the amendment I shall suspect that the Government are completely in the pocket of the big six, and do not want it because it would cause trouble. They are more frightened of the lights going out—that is what the big six have said would happen—than they are willing to establish a structure for the industry that will take us forward into the future. I look forward to hearing what the Minister has to say in reply to the amendment.

The Earl of Caithness (Con): My Lords, I must speak against the amendment. My noble friend Lord Jenkin made some very good points about trust and getting more competition. That is absolutely true. However, competition narrowed considerably under the previous Labour Government. The noble Lord, Lord Berkeley, and the noble Baroness, Lady Worthington, have waxed lyrical during our discussions but we ought to recall that the previous Secretary of State for Energy under the Labour Government—Mr Edward Miliband—did absolutely nothing to correct the situation and refused to refer any of the energy companies to the Competition Commission.

My concern is that this amendment is the wrong way to solve the problem highlighted by my noble friend Lord Jenkin because it would take away parliamentary democracy. The amendment refers to,

“a formal review of the regulation of competition”.

That formal review could be held at any time. Let us imagine that we have a Government whom none of us in this Chamber likes. If the amendment is passed, they will turn to this new clause and announce that they will carry out a formal review. The formal review will have whatever outcome they want and they can implement its findings without primary legislation. That would take away a hugely important role not just of this House but of the other place.

Lots of little things could be done by secondary legislation. Having been a Minister, I am sure that officials and civil servants have already worked out as many areas as possible that can be dealt with by secondary legislation. However, very significant changes may arise which need to be properly debated in both Houses of Parliament, but which could escape that close scrutiny if this amendment is passed. If a future

19 Nov 2013 : Column 889

Government of whatever persuasion were to use this new clause, I can imagine the row that would erupt in this House and the complaints that would ring around this Chamber that there had been a lack of opportunity for debate, particularly from the noble Lord, Lord Berkeley. We should not put ourselves in that position.

Lord Cameron of Dillington (CB): My Lords, hotfoot from Ethiopia, I rise to support this amendment. Unlike the noble Earl, Lord Caithness, I believe that this is a fallback amendment which cannot in any way harm either the general thrust or the detail of the Government’s policy, as spelled out in the Bill. As I said on Report, and the noble Lord, Lord Jenkin, has made amply clear this afternoon, the Secretary of State continually talks the talk about the importance of competition to all parts of the energy industry, yet the Government seem strangely reluctant to walk the walk when it comes to the Bill. I remain rather mystified by that.

I am sure that the noble Lord, Lord Jenkin, will respond to the comments of the noble Earl, Lord Caithness. However, the amendment refers to drafts of instruments being approved by each House of Parliament, so I do not see that the Secretary of State would be denied democratic freedom under the revolutionary scenario that the noble Earl made out. I hope that the unassuming, safety-net nature of the amendment will prove an exception to the Government’s reluctance to walk the walk in respect of competition.

Lord Roper: My Lords, this proposed new clause follows up debates we had in Committee and on Report and is, I believe, a matter of considerable importance. I shall therefore listen with great care to what the Minister has to say in reply.

Baroness Worthington: My Lords, here we are at Third Reading debating an issue of such fundamental importance that it merely serves to illustrate the point that, although this Bill is considerable in size and breadth, it fundamentally fails to do what it says it is going to do: that is, reform the market.

Although I am sympathetic to the defence of this amendment that has been put forward, it simply is not enough. It hinges on whether one believes that a review undertaken by Ofgem will deliver anything. On this side of the House, we are absolutely certain that it will not. We have had numerous reviews from Ofgem, and Ofgem has clearly demonstrated that it is not fit for purpose. That is why the Labour Party and the leader of the Opposition have been absolutely crystal clear that under a Labour Government we would have a complete restart of that regulatory body to refocus it on putting the consumer first and bringing genuine competition across the market, not just in supply, tariffs and the consumer-facing parts of the industry, but all the way through the chain. That includes the generation market and the wholesale market, but also, importantly, the regulated aspects of this industry.

5.15 pm

Throughout the passage of the Bill one part of the energy sector has gone almost without mention. That is the regulated aspects of the industry: the distribution

19 Nov 2013 : Column 890

network operators and the transmission grid operators. I inform noble Lords that on Friday Ofgem will be issuing a consultation on the business plans of the DNOs. We raised this issue in Committee. They are now extended to eight-year regulated periods. Starting in 2015, they will sign off on a business plan that will last eight years to 2023—just think how many Governments that covers—and that essentially ties the hands of future Governments who want to look at that aspect of industry. It is an important issue because these regulated industries are going to change; they will see changes arising from the Bill. If the Bill does what it says it is going to do, which is to decarbonise and to help us move to a more sophisticated demand-management system through capacity mechanisms, it has significant implications for those regulated aspects of the industry and yet we have heard scarcely a word about that. We have a price review which is completely out of synch, and the business plans have been drawn up before the Bill has even received Royal Assent.

It is evident to me that the regulator is not fit for purpose. I have heard anecdotally that various parts of Ofgem, not the whole thing, have gone completely native and are now merely rubber-stamping what the industry wants. Therefore it is deeply regrettable that we are, at this very late stage, having such a fundamental discussion. It reflects very badly on the Government. This would not even be an issue if the leader of the Opposition had not made it such a political centrepiece of his conference speech, and here we are, several months later, discussing it and still we have no cohesive or comprehensive answer from the Government.

I support the principle behind the amendment, but I fear that it is simply too little, too late. We need a fundamental resetting of the market to rebuild the trust which, it is clear, has been lost. We must look at all aspects of the industry again to ensure that we put the consumer first and, as we strive to meet the many challenges involved in energy policy, that we put the consumer and value for money centre stage as we also seek to achieve the very important aims of keeping the lights on and addressing climate impacts. I am grateful to the noble Lord, Lord Jenkin, for raising this at this time. However it is, as I said, too little, too late. We really need a fundamental review of this, and that can happen only under a new Government.

Baroness Verma: My Lords, I am grateful to my noble friend Lord Jenkin for his amendment and for raising again the important issue of competition. I reassure my noble friend that we are deadly serious about greater competition. Competition is at the heart of the Government’s drive to make sure that energy bills are as low as they can possibly be, to ensure that all consumers are getting a fair deal and, as importantly, to build the trust that my noble friend referred to.

In response to the noble Lord, Lord Cameron, we are walking the walk. That is why we have seen a great number of new entrants since 2010. The Government announced in the annual energy statement that Ofgem and the competition authorities—the Office of Fair Trading and the newly created Competition and Markets Authority—will conduct an annual competition assessment of the energy market. The first assessment will be completed by spring 2014. Together, these

19 Nov 2013 : Column 891

independent regulators already have extensive powers to investigate the market and to implement the full range of structural and behavioural remedies to strengthen competition. The statutory framework includes important safeguards to give market participants confidence in a fair and predictable regime. The Government have established the Competition and Markets Authority, which will have strengthened responsibilities and powers and will take on the work of the Competition Commission and a number of responsibilities of the Office of Fair Trading. This will lead to more robust and faster decision-making.

We are strengthening Ofgem’s hand through the Bill. The Government are taking powers to enable Ofgem to step in to improve wholesale market liquidity should its reforms be frustrated or delayed, and we are giving statutory backing to Ofgem’s retail market reforms. We are also giving Ofgem a new power to compel energy businesses to provide redress to consumers. These measures will further strengthen Ofgem’s ability to take effective and timely action to strengthen competition.

I listened carefully to the noble Baroness, Lady Worthington, about the weakness of Ofgem and what her party would do, but Ofgem’s inception was under her Government, and they had 17 reviews. They had ample time to reform Ofgem, if they had wanted to. While I keep hearing from the noble Baroness that her party would abolish Ofgem, they have never given us a sound, credible alternative. When she says that the leader of the Opposition has put consumers at the heart of prices, I remind her that the Prime Minister highlighted the need to simplify the many thousands of tariffs that cropped up under the previous Government.

I should say to the noble Lord, Lord Berkeley, that we are not frightened of the big six. That is why Ministers in my department have been having tough, robust conversations with all energy providers to ensure that they understand quite clearly that this Government are determined to ensure the best outcomes for the consumer.

Finally, the strategy and policy statement will give Ofgem clear guidance on the policy outcomes that are to be achieved to implement the Government’s strategic energy priorities. The Government stand ready to act in support of the regulators where necessary, as I have already said to my noble friend. We had a constructive conversation yesterday in which I wanted to reassure him that those powers are already there. It is for us to ensure that they are being utilised properly. My noble friend mentioned the Which? report on ring-fencing. Ofgem, the Office of Fair Trading and the Competition and Markets Authority will consider all measures that may be necessary in the competition assessment. Together they have far-reaching powers and are able to put in place the full range of remedies, which may include some forms of ring-fencing. It is for the competition authorities to decide what needs to be done, based on evidence. I hope that my noble friend is reassured that the Government are indeed taking this matter very seriously. The regulators have extensive powers to act, which are being strengthened by the creation of the Competition and Markets Authority. I hope that on that basis he is content to withdraw his amendment.

19 Nov 2013 : Column 892

Lord Jenkin of Roding: My Lords, my noble friend has gone quite a long way to reassure me, but I have one or two other questions. However, before I come to them I shall respond to my noble friend Lord Caithness. This amendment simply creates a new power to make regulations that confer powers on the regulator; it does not attempt to say what should be in those regulations. Of course they would be subject to consent by both Houses of Parliament, and I have no doubt that if a significant new power were required, that, too, would have to be subject to an affirmative resolution, or possibly a super-affirmative resolution, in both Houses. I do not see this as being undemocratic and without parliamentary review. The parliamentary review would happen inevitably at each stage. I cannot accept my noble friend’s suggestion that this is the wrong answer.

I recognise and am grateful for the support that the amendment has received, even the somewhat doubtful support from the Opposition Front Bench. I can only echo my noble friend on the Front Bench. The Opposition have yet to explain of what this new marvellous—what should we call it?—“restart” of the whole system is to consist of. I believe in building on what we have got and improving it, rather than taking a leap in the dark and making some entirely new start. These reviews that have been announced—I caught wind of them some time before the Prime Minister made his statement in the other place—are a major new effort to get at why competition has not been working largely because of the reduction in the huge number of generators under the previous Government.

I am grateful to those who supported the amendment. I agree that the main purpose of stronger competition is to protect consumers. A recent National Audit Office report looked at the impact of infrastructure investment on consumer bills. Its view was that,

“Government has made no assessment of the overall impact of infrastructure on future bills or whether those bills will be affordable. Therefore government and regulators are taking decisions on behalf of consumers in the absence of full information about the situation for consumers”.

This is a worrying report. It points to a considerable shortcoming of not just this Government, but all Governments. It is interesting that its first two recommendations are aimed at the Treasury. The Treasury has to set up the structures whereby consumer interests can be considered during the whole question of the infrastructure investment. I do not think I am being unduly alarmist by pointing out that if there has been neglect of the consumer interest in the consideration of the Government’s infrastructure investments, it is not altogether unreasonable to assume that it has also been neglected elsewhere in government, and that this is a wider problem. I do not want to pursue that now except to say that I shall be looking forward to the Government’s response to the National Audit Office report.

My noble friend has gone a long way. She referred to the new powers in the Bill. She also referred to the extra powers that may be available to the Office of Fair Trading and the new Competition and Markets Authority. I shall take her at her word that these are the kind of things that could deal with the proposal that has been made by Which? about separating out

19 Nov 2013 : Column 893

the vertically integrated forms. She indicated that that could well be part of the process. On that basis, it would be wrong to divide the House. One point on which I do agree with the noble Baroness on the Opposition Front Bench is that this is a very late stage to raise an important issue. It arose out of the Statement that was made on 31 October. That was the first time that we got the details of these reviews. I hope I have not been wasting the time of the House in bringing this forward, but in this circumstance it would not be right to take the opinion of the House. I beg leave to withdraw the amendment.

Amendment 6 withdrawn.